MILLIONS of struggling households are set to benefit from a huge change to council tax.
Households across Wales will be given extra time to deal with missed council tax payments under new rules announced by the Welsh government.
Martin Lewis has called council tax debt collection “vicious, aggressive and damaging”[/caption]
Families will now have 63 days to sort arrears before enforcement action can be taken.
At the moment, if you miss a monthly payment then within three weeks you could be asked to pay for the entire year.
If you don’t pay that, within six weeks the matter can be taken to court, extra costs added on top and bailiffs can be called in.
Campaigners including Martin Lewis and the Money Advice Trust have fought hard against the practice and called it “vicious, aggressive and damaging”.
The new rules will come into force from next April.
Officials said the reforms will also create clearer rules for reminder and final notices.
The aim is to help prevent debt from escalating quickly while making sure councils can still act against households that deliberately avoid payment.
It comes after the Welsh Government launched a consultation that received more than 250 responses from councils, advice organisations and members of the public.
A significant majority supported extending the minimum period before enforcement.
The Government said the proposals would support struggling households and prevent them from “becoming trapped in harmful cycles of escalating debt”.
Finance Secretary Mark Drakeford said: “We’re supporting councils to prevent rapid escalation of council tax debt, by giving more time for households to recover from unexpected setbacks, check eligibility for support, and get back on track.
“Anyone struggling to pay council tax should contact their council as soon as possible, or use the free advice services available through the Welsh Government’s Claim What’s Yours service.”
Meanwhile consumer champion Martin Lewis said: “Council Tax debt collection is the most vicious, aggressive, damaging form of debt collection there is out there.
“We’ve spent the last year campaigning hard for this hideous system to change, and so I’m over-the-moon the Welsh government has listened, and Wales is going to take the lead on improving things.”
What’s happening in the rest of the UK?
Similar practices for council tax debt collection are also carried out in England.
Scotland has different rules for council tax debt collection, and Northern Ireland uses an entirely different system.
The UK Government launched a similar council tax consultation in May but the outcome of that has not yet been confirmed.
The consultation laid out plans to change the way council tax debt, or arrears, is recovered.
Under the plans, councils will have to wait longer before demanding a bill is paid in full and the costs charged to households through liability orders will be capped.
A liability order is a demand for payment of council tax issued by a Magistrates’ Court.
Currently, if you miss a single payment your local authority can demand you pay the bill for the entire year and use bailiffs to enforce this.
The consultation was launched following pressure from consumer groups and debt charities like Citizens Advice and StepChange over the rules around council tax collection.
Consumer expert Martin Lewis has described the use of bailiffs on households who haven’t paid their council tax as “caricature of the worst loan sharks”.
Council tax is considered a priority bill, which means those not paying it can end up in court and even facing imprisonment.
What council tax support is available?
THERE are several ways you can get discounts and reductions on your council tax bill.
In some cases, you can even get the bill completely wiped with a council tax reduction.
Factors such as your household income, whether you have children, and if you receive any benefits, will influence what you get.
To apply, visit https://www.gov.uk/apply-council-tax-reduction.
You’ll need your National Insurance number, bank statements, a recent payslip or letter from the Jobcentre, and a passport or driving licence when filling out the details.
Below, we reveal all the ways you can get discounts or a reduction on your bill:
Single person discount
If you live on your own, you can get 25% off your council tax bill.
This also applies if there is one adult and one student living together in a property, or if there is one adult and one person classed as severely mentally impaired in the home.
If you live with someone who doesn’t have to pay council tax, such as a carer or someone who is severely mentally impaired, you could get a larger reduction too, of up to 50%.
And, if you live in an all-student household, you could get a 100% discount.
Retirees
Pensioners may also find themselves eligible for a council tax reduction.
If you receive the Guarantee Credit element of Pension Credit, you could get a 100% discount.
If not, you could still get help if you have a low income and less than £16,000 in savings.
And a pensioner who lives alone will be entitled to a 25% discount too.
Low-income households
If you are on a low income or receiving benefits, you could be eligible for a reduction on your council tax.
Whether you are eligible will vary depending on where you live.
You could also get a deferral if you’re struggling to pay your bill, or you can speak to your council about setting up a payment plan to manage the cost.
But one thing to remember is if you are struggling you should contact your council as early as you can.
More potential changes to council tax
The UK Government’s consultation also looked at whether council tax payments should be spread out more.
Currently, council tax is paid over 10 months.
But officials are looking at whether this could be changed to over 12 months to help households manage their finances better.
Separately, reports suggest the Government is planning on replacing the council tax system with a local property tax.
The Chancellor is studying plans for a levy on houses worth over £500,000, according to The Guardian.
The paper said the Treasury is looking at a “proportional property tax” which would be paid when owners sell their homes.
It claimed the shake-up could also pave the way for a new local levy to replace council tax, which is still based on 1990s property values.
Treasury officials told The Sun that tax reform is being explored but nothing has been decided.
