As council tax debt hits record figures, new reports highlight how aggressive council debt recovery tactics cause distress for vulnerable people.
Published November 2024
Council tax debt in the UK has hit a record £6 billion, according to new government figures.
Reports from the Money and Mental Health Policy Institute (MMHPI) and StepChange reveal how aggressive council tax debt collection tactics cause financial distress and worsen mental health issues for vulnerable people.
An unpaid council tax bill can spiral into extra fees, court orders, and bailiffs at the door.
In the grip of a cost of living crisis, these enforcement methods hit those who are unable to pay the hardest. It can discourage cooperation and make it even harder for people to manage their debts and engage with councils.
Who's falling behind on council tax - and why?
More than three million people are in council tax arrears.
A third of StepChange debt advice clients have council tax arrears, and two thirds of those people have extra vulnerabilities beyond finances, including mental or physical health conditions, learning disabilities, and addiction. People cited conditions including stress, anxiety and depression as a cause of falling behind on council tax.
People with mental health issues, younger people, and minoritised ethnic group are more likely to fall behind on council tax payments. They are more likely to have lower earnings and face barriers to building financial resilience.
And financial help with council tax is patchy. There's the Council Tax Support benefit scheme, but what is available depends on the local council's policy, and there's a lack of central government funding for it. One StepChange debt adviser called it a "postcode lottery."
The squeeze of the cost of living crisis
As the cost of living crisis continues, many people find it impossible to keep up with essential outgoings. The problem is only likely to grow, as 68% of StepChange clients cited a cost of living increase as a reason for falling behind on their council tax.
Some try to stay afloat by sacrificing necessities: two thirds of of StepChange clients missed a utility payment to keep up with council tax. Over half rationed their heating, electricity, or water.
But many people simply do not have enough money to cover the basics. Nearly half of clients with council tax arrears had a negative budget, meaning their monthly income does not cover their costs. Unlike some other taxes, council tax isn't income-adjusted. For people on low incomes, it represents a significant chunk of the household budget.
When ends don't meet, something has to give. Sometimes, this is limited to council tax payments, but other times, it leads to more serious problems that put the person's home at risk. For those with council tax debt, 73% are also behind on utility bills, and more than half are behind on housing costs.
Payment demands, court orders, bailiff visits
When someone misses a monthly payment, the council sends a reminder notice. If the overdue amount is not paid within three weeks, the council can demand the entire year's bill as a lump sum, £1,688 on average. An impossible ask for most. MMHPI research shows that 91% of people behind on council tax can't afford to pay the full amount.
And this fast track approach to debt collection does not stop there. If the person doesn't pay the lump sum, they can become embroiled in costly legal processes. A liability order is a payment demand from the court. While the council only pays 50p for a liability order, they charge people up to £130 in fees.
Once enforcement agents are involved, extra fees quickly mount. They're private bailiffs, often working on commission. Fixed charges apply, and for debts over £1,500 a percentage of the total debt is added on.
The human cost of council tax enforcement
Council tax debt collection is not just about money. Aggressive enforcement can leave people feeling isolated, fearful, and less likely to seek help. StepChange suggests it's also counterproductive, reducing the council's chances of recovering the debt.
When aggressive tactics push people away from seeking help
According to the reports, councils often escalate debt action without considering a person's circumstances or what support they might need. Only 5% of clients with council tax debt felt their council took their personal situation into account before starting enforcement, according to StepChange.
The rapid escalation of action leaves people feeling overwhelmed, unable to think clearly as more demands land on the doormat. Council communications leave them feeling anxious, scared, or depressed. This particularly affects people with mental health problems, whose symptoms can make problem solving under pressure a challenge.
These tactics discourage people from reaching out for support, making it even harder to get back on track.
A visit from the bailiff
A bailiff visit is a nightmare scenario which is, unfortunately, all too common in council tax collection. Almost half of StepChange survey respondents with council tax arrears reported experiencing bailiff enforcement.
Bailiffs are incentivised to push for unaffordable payment plans. Their fees are collected before a penny goes to cover the debt. Some StepChange respondents said they were pressured into a payment plan they couldn't afford.
A third reported intimidating or threatening behaviour from bailiffs. A quarter of StepChange clients said bailiffs threatened them with imprisonment and 94% struggled to sleep at night. The MMHPI found three quarters of people referred to a bailiff have experienced a mental health problem. The stress of a visit can worsen mental and physical health.
People described feeling trapped in their own homes: afraid to leave, yet fearful of a knock at the door.
Intimidating bailiff practices: video evidence
Research by the Enforcement Conduct Board published in October 2024 analysed footage from cameras worn by bailiffs. There were multiple instances of breaches of the National Standards for Enforcement Agents. The National Standards, published by the Ministry of Justice, set out what bailiffs need to do to follow the law.
Bailiffs were recorded employing intimidating tactics against vulnerable individuals. In one case an older widowed woman was clearly distressed after being left with unmanageable debt by her deceased husband. Bailiffs also breached data protection rules and threatened to remove essential goods like beds and furniture.
One enforcement agent is recorded falsely claiming that obstructing them is a criminal offence leading to 52 weeks in prison. Another that he is “connected to all the banks in the country, so I can see your movements”. In a harrowing example, an agent attended a property which appeared to be occupied solely by Muslim women, and said that if the debt is not paid straight away another agent will "walk in and disrespect you." This threat is repeated.
The council tax trap
Martin Lewis, founder of MoneySavingExpert, accuses councils of behaving like "the worst loan sharks."
Some debt advisers point out that councils don't use threats of violence or exorbitant interest rates. But council tax enforcement often drives people deeper into financial and personal hardship. Lewis's charity, the MMHPI, calls this the "council tax trap."
Contrast this with the consumer credit sector. Utilities, personal loans, car finance. They're regulated by the Financial Conduct Authority and must provide tailored support to vulnerable people. Regulation of council tax enforcement lags behind, with fewer protections for people in debt.
Many councils face mounting financial pressures. It's perhaps expected they have an incentive to use the most robust enforcement methods available to them to raise much needed income. But Lewis's comparison to loan sharks suggests councils might be pushing things too far.
A call for change
The reports set out recommendations for change, advocating for a regulated approach to council tax collection to ensure consistent, fair treatment for vulnerable people with debt.
Stop people from falling behind
A solid support system could help people from the very beginning, preventing them from falling into council tax arrears in the first place. Making adequate Council Tax Support available for everyone, no matter where they live, would help.
Central government should make sure that local councils have enough money for a comprehensive Council Tax Support system, and for a generous system of support.
A fair and regulated collection system
Both reports recommend a pre-action protocol, ensuring that councils must take specific steps before court action or instructing bailiffs. People should have more time to deal with their debts and not be pursued for the full year's tax after just one missed payment.
Court processes to obtain a liability order and enforce the debt must be thoroughly examined. Changes could include dealing with council tax in civil courts instead of criminal courts and setting upper limits on what people can be charged. The law says the council can recover reasonably costs, but there is no information about what that might be.
The reports recommend using bailiffs as a last resort and exempting Council Tax Support claimants from bailiffs action.
The need for bailiff reform
The bailiff enforcement sector's lack of effective regulation or failure to follow standards was a recurring issue in both reports. The video evidence from the Enforcement Conduct Board research paints a shocking picture.
Since 2022, the Enforcement Conduct Board is responsible for standards in the bailiff industry. It recently launched its updated standards, but it has no statutory basis. Giving it legal standing could raise standards across the industry.
There's no redress scheme that covers all enforcement agents and is available for people to use. Currently, people wishing to file complaints about bailiffs face costly, complex court processes. Bailiffs rarely suffer the consequences for breaching the rules.
A system that helps people in financial need
Current council tax collection practices can trap people in debt, with those least able to pay bearing the brunt. Rather than providing support, councils often fast track debts to courts and bailiffs. This approach intensifies financial pressure and compounds mental health struggles, isolates vulnerable people, and discourages engagement with support.
The call for reform is growing louder: council tax recovery methods must change to help people. By supporting people from the beginning, implementing collection regulation, and reforming the bailiff sector, vulnerable people can be better protected and supported when they face council tax issues.
As one client told StepChange, "a little bit of compassion goes a very long way."
