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Council Tax Debt Reaches £6 billion

Published by Prerana
Posted Date: June 24, 2024 , Modified Date: June 24, 2024

Rising rates take Council Tax debt to new heights in 2024. With local councils hiking Council Tax rates, more people are finding themselves unable to pay the tax. Local level councils are seeking strict measures to be able to collect the sum. However, a survey suggests people and experts are looking for alternatives to be able to solve the tax problems without burdening the public.

Why is Council Tax Debt Rising?

Council Tax is the type of tax charged by local councils to provide domestic services such as waste collection, road maintenance, public libraries, and many more. Anyone who is over 18 years old must pay the Council Tax. However, there are certain exemptions. Also, Council Tax is paid on the basis of various bands according to the market value of your property.

Band

Employment Income

2023/24 rate

2024/25 rate

A

Up to £40,000

£1,174.60

£1,243.61

B

£40,001 to £52,000

£1,370.37

£1,450.87

C

£52,001 to £68,000

£1,566.13

£1,658.14

D

£68,001 to £88,000

£1,761.90

£1,865.41

E

£88,001 to £120,000

£2,153.43

£2,279.95

F

£120,001 to £160,000

£2,544.97

£2,694.48

G

£160,001 to £320,000

£2,936.50

£3,109.02

H

Over £320,001 

£3,523.80

£3,730.82

The major reason for the Council Tax debt rise is the tax rate increasing by a maximum amount of 5%. The Council Tax debt has increased by 71%, with a debt of £3.5 billion since 2020, while now it has hit a whopping £6 billion. A debt charity service in the UK, StepChange has seen an increase in the average amount of debt for their clients by 50% from £1,146 in 2019 to £1,726 in 2023. Also, there are various possibilities to reduce your Council Tax bill.

What Could Be the Possible Solution?

The Council Tax for the Tax Year 2024/25 has increased by 5% on average for most local authorities. Experts claim these tax rises are inevitable to cover costs and benefits with the rising inflation. However, in some local councils, the tax rates have increased by more than 5%, with Woking at 10%, Birmingham at 9.94%, Slough at 8.51%, and Thurrock at 7.98%.

Council Tax Rise

Due to the higher amount of debt, local authorities are opting for strict actions to collect the remaining amount. The consequences can be:

  • Charging households the full amount in one payment
  • Getting bailiffs involved to collect the amount
  • A three-month prison sentence

However, many believe these consequences are poor practice as they put a burden on the public. According to StepChange’s survey of May 2024, with 2,116 responses, 69% of people support measures for councils to stop using bailiffs. In addition, 89% supported a decision to introduce a regulator and 69% agreed that the rates must be reduced for the lowest of incomes and funded by the government.

Conclusion

Council Tax debt has seen an increase rapidly since the pandemic. The major reason for the increase in council tax debt is the rise in the tax rate. Many households are unable to pay the taxes due to other major cost cuts.

Local authorities are planning to make stricter decisions to collect the money, which can even result in a three-month sentence. However, according to a survey published by StepChange, many people support a regulator instead of a bailiff to collect the taxes.

Prerana
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