Councils will be forced to wait 63 days before demanding full repayment, as charity warns current rules push vulnerable people into crisis
The government has announced significant reforms to council tax collection in England, following a sustained campaign by the Money and Mental Health Policy Institute, the charity founded by Martin Lewis.
Under the current system, missing a single council tax payment can trigger a demand for the full annual bill – typically £1,868 – within just three weeks. Some councils also add uncapped charges for liability orders, the legal notices that allow bailiffs to be deployed, with some residents forced to pay up to £155 in extra fees.
In a foreword the the government’s Consultation Outcome Report which was published today (15th) Jim McMahon, Minister of State for Local Government and English Devolution said: ‘Local taxes help pay for essential local services which people rely on, and so it is right that deliberate tax avoidance is not tolerated; by the same token, the government is well-aware of the real financial pressures still felt by households, and that there are examples of aggressive collection practices inflicting misery on residents across England.’
From April 2027, councils will be required to wait at least 63 days after a missed payment before demanding full repayment. The government will also cap liability order charges at £100.
The changes form part of a broader consultation on modernising council tax administration, which the government acknowledges has not been updated in decades. Other proposals include switching billing from ten months to twelve months by default, improving transparency so residents can see what their tax funds, and renaming the outdated ‘severe mental impairment’ disregard to encourage take-up.
Martin Lewis, Founder and Chair of the Money and Mental Health Policy Institute and MoneySavingExpert, said: ‘Council Tax debt collection is so aggressive it’d make banks blush. It’s the most vicious and damaging form of legal debt collection out there – causing counterproductive misery for millions. We’ve spent the last 18 months campaigning hard to change this hideous system, and having seen so much pain caused by it, I’m genuinely moved by this huge first step towards making things better.
‘Currently, in England, if you miss a monthly payment, many councils, usually within three weeks, demand payment for the entire year. How people who can’t find a month’s money are expected to find a year’s I don’t know. Yet if they can’t pay, within just three more weeks, they are often taken to court, have ‘admin costs’ added, and soon see bailiffs sent in. No commercial firm would be allowed to do anything close – constituents are treated worse than customers.”
‘The new rule from next April means councils must wait two months, not three weeks, to ask for a year’s money, and the ‘admin costs’ will be capped at £100. In a perfect world, it would be even longer and the lower cap would apply, but this is still a hugely welcome change to a 33-year-old process. For councils too, it is worth remembering that this grotesque system is often catastrophic for people’s finances and wellbeing, leaving many needing more help and support, and ultimately the same council having to pick up the pieces.’
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