Spike in Council Tax debt
How the cost of living crisis could lead to a spike in Council Tax debt
I am leaving Citizens Advice Scotland this week and have been reflecting on how much I have enjoyed my time here. I’ve been thinking about what assumptions have been challenged and the discoveries I have found surprising – I thought I would share one of these with you.
I work in the Financial Health Policy team, meaning much of our work involves raising awareness of the impact debt has on our clients. Coming into this role, I assumed that this would involve exposing rogue lenders and pushing the financial services sector to support customers struggling under the weight of snowballing credit card debt, overdue loans, or burgeoning overdrafts (which, don’t get me wrong, we do). I was therefore taken aback to learn that council tax debt is by far the biggest debt issue clients come to our bureaux with.
Council tax is a particularly perilous debt to have because local authorities can take action to recover the debt really quickly. By the time clients come to our bureaux for help, it’s likely that their debt will have already been passed to Sherriff Officers whose job it is to legally enforce collection. At this point, the client is liable to pay the full years bill, plus an additional 10%. They are also at risk of having money taken from their bank account or deducted from their income. This can happen after as little as two missed payments.
So why do so many people fall behind on council tax?
There’s a whole host of reasons and each person’s journey into council tax debt is unique. But from speaking to our advisers, we have some idea of the most common reasons.
Firstly, people just don’t have enough money for their essentials. Research we conducted found nearly half of our clients with multiple or complicated debts were experiencing what we call a negative income, meaning their income is less than their basic living costs – locking them in a monthly cycle of prioritising what to spend money on. We know the reality is people will seek to prioritise their immediate needs, topping up the electricity meter or getting food on the table, before council tax.
Secondly, we know lots of people are paying more on their council tax than they have to. There’s lots of ways people can save on their council tax bill but they aren’t widely understood. In fact, we have had clients who are not liable to pay council tax at all come to our bureaux after years of struggling to juggle their monthly bill. People reading this should visit www.checkmycounciltax.scot to see if they are liable for a Council Tax Reduction of some sort.
Thirdly, for many of our clients, the first time they have spoken to someone face to face about their debt is when they walk through our bureaux doors. Their local authority may have sent letters, but these can be confusing. And, given the stress and anxiety debt can cause, letters can feel intimidating and can scare people out of seeking help.
We have commissioned research to get to the heart of why council tax debt is causing such a problem for people in Scotland, with a view to making the system better, but until then people shouldn’t put off concerns and seek advice as soon as possible.
Laura Toffolo is a policy officer in the Financial Health team at Citizens Advice Scotland. This column first appeared in the print version of the Herald on 21 November 2022.