Major council tax payment change announced by government

Councils can demand payment for the entire year just two weeks after people miss one monthly payment under current rules, leaving people facing extra costs and being taken to court.

Local authorities also often deploy bailiffs to recoup the money, with StepChange users telling the charity it can send them into a debt spiral.

But, under new plans, households will have 63 days, about two months, to settle up, and any admin costs will be capped at £100.

Consumer champion Martin Lewis said he was “genuinely moved” by the shake-up.

Mr Lewis, who has pushed for a more lenient system, 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.”

The Government will also change council tax billing from 10 months to 12 months by default, which could help households to spread the cost of their payments over a longer period.

StepChange CEO Vikki Brownridge said: “Being hit with such a large bill at short notice has for too long been a massive hurdle for people attempting to get back on the road to financial stability.

“Changing the timeline escalation from one missed payment to three will positively mean households have more time to engage constructively with their local authority, seek debt advice, and reach affordable arrangements - ultimately giving them more room to repay.

“What’s more, introducing, for the first time, statutory steps councils have to take to support residents ahead of enforcement action, as well as a cap on liability orders, will ease the burden on our clients and residents struggling with council tax arrears and managing their payments.”

York Outer MP Luke Charters, a major supporter of StepChange’s campaign, added: “Behind every council tax debt is a human, often someone already dealing with financial stress, illness, caring responsibilities or insecurity at work. They deserve understanding, not punishment.

“Since my election in July 2024, I have worked closely with StepChange, and Martin Lewis’ Charity the MMHPI and others to press for change, because I have seen first-hand how the council tax trap can cause real harm to people’s mental health, wellbeing and financial stability.

“I am proud that a Labour Government is taking action to fix this. This is what compassionate government looks like, recognising when a system is unfair, listening to charities and campaigners, and acting to support people rather than penalise them.”