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Fears of a Council Tax debt 'explosion' in 2021

Citizens Advice Scotland is warning of a council tax debt ‘explosion’ as the impact of the pandemic makes a bad situation even worse in 2021 as clients have racked up millions in arrears.

Council tax debt is currently the number one debt issue the Citizens Advice Bureau network sees.

Analysis of figures for 2019/20 reveals that 2,257 people sought help from the Citizens Advice network with a complex debt issue involving council tax, owing a cumulative £6.8million in council tax arrears. A complex debt issue is where someone owes multiple debts.

Worryingly, the average debt owed was over £3,000– almost three times the average council tax bill of £1,201

The charity fears council tax debt could grow even further in 2021, as payment protections and furlough schemes end. This will force more people into reduced incomes and putting extreme pressure on household decision-making around which bills to pay, particularly council tax. 

CAS is calling on people to make use of the Scottish Government’s Council Tax Reduction scheme which can help reduce future payments. For some people, it can also offer a backdate of up to six months.

CAS has an online tool at www.checkmycounciltax.scot for people to use to check all their Council Tax entitlements to savings, reductions, discounts and exemptions to help lessen the pressure on meeting council tax bills.

The charity has also recently developed a new online tool called Money Map, which allows people to round up all their options to boost incomes and cut living costs during these difficult times at www.moneymap.scot.

CAS Financial Health spokesperson Myles Fitt said:

“Scotland is potentially facing an explosion of council tax debt in 2021.

“The figures before the pandemic are bad enough, but the real fear is that Covid-19 is going to make matters much worse.

“Councils across Scotland showed a real empathetic approach to those who found themselves in council tax payment difficulties, and the payment breaks in the first six months of the pandemic were extremely welcome. However this has led to arrears building up, arrears that will be difficult to meet for the many people who have during that period experienced an income drop due to unemployment or reduced working hours.

“For others, this problem is yet to come in 2021 when the economic squeeze on personal finances is felt as the furlough scheme and payment support measures close at the end of April, ironically in the same month the first payments of council tax in the new financial year are due.

“Action is required to stop council tax debt - already the number one debt issue the Citizens Advice network sees - becoming an even bigger problem next year.

“Citizens Advice Scotland would like to see those who have fallen into council tax debt solely because of an economic consequence of COVID-19 be given some sort of help. This could be through the Scottish Government undertaking to meet the costs of writing off such debt, the establishment of a Council Tax Hardship Fund, or through the long-term continuation of supportive forbearance by local authorities.

”CAS also supports greater awareness the Council Tax Reduction scheme which helps those struggling to meet on-going bills and which could for some provide backdated payments. That’s why CAS encourages people to check if they are entitled to council tax savings, reductions, discounts or exemptions through our online tool www.checkmycounciltax.scot but also to explore other ways to boost their incomes more widely through our Money map tool www.moneymap.scot.

”Finally, if people have council tax arrears or are worried about getting into council tax debt, please speak to your local Citizens Advice Bureau. Our trained advisers can assist and help stop current payment difficulties building into future problem debt.”

ENDS

NOTES TO EDITORS

Analysis of complex debt cases dealt with by the Citizens Advice network in 2019/20 reveals that 2,257clients sought help for a complex debt issue involving council tax debt. The cumulative debt owed was £6,817,394 with an average debt of £3,020.56

The average council tax bill in 2020/21 was £1,201. Source here: https://www.gov.scot/publications/council-tax-datasets/

Backdate of Council Tax Reduction will depend on an applicant’s age and circumstances but if it can be demonstrated there was good reason for not making the claim earlier, it can be backdated for up to 6 months.