Modernising and improving the administration of council tax

• Council tax income is an increasingly important funding stream for the local services millions of residents rely on every day. Councils have a duty to residents to collect taxes so those services are not affected.
• All councils already allow residents to pay council tax over a 12-month period. Councils also know residents can be affected by debt and financial hardship. Councils have implemented a wide range of measures to ensure that recovery practices are fair, and support is available for households who are struggling to pay their bills.
• We look forward to working with the Government on an approach that enables councils to invest in council tax collection practices that effectively balances the collection of vital revenues with measures that help those struggling to pay.
• The LGA notes that the consultation is about the administration of council tax, rather than fundamental reform of council tax, and that the Government has previously made it clear that the latter is out of scope. Nonetheless, the LGA would wish to draw the Government’s attention to our policy on council tax reform which is set out in the joint report, with The Chartered Institute of Public Finance and Accountancy (CIPFA) and Society of Local Authority Chief Executives and
  Senior Managers (SOLACE), Reforming the local government funding system in England. This includes a call for a fundamental review of council tax alongside other council funding sources and that councils should have the power to vary all council tax discounts.

Question 1: The Government intends to change the default bill instalments from 10 months to 12 months. Do you agree with this approach? Why/why not?

The LGA is aware that 12 months is a widely accepted standard for household bills. All councils already allow residents to pay council tax over a 12-month period. Councils also know residents can be affected by debt and financial hardship. Councils have implemented a wide range of measures to ensure that recovery practices are fair, and support is available for households who are struggling to pay their bills. The current 10-month standard for council tax is also well understood.

Some councils are concerned that moving to 12 months by-default will reduce staff capacity and therefore officers’ ability to support residents during the final two months of the year. It will also affect capacity to prepare for the new billing year.

We would support the move to 12-month billing if it will improve outcomes for residents. However, new burdens funding will be required to provide councils with certainty and resources to invest in the administration and communication of these changes.

Question 2: If the  Government were to move to 12-month instalments by default, should taxpayers be able to request to pay in 10-monthly payments?

Yes, it should be made as easy as possible for taxpayers who wish to continue to pay over 10 months.

Question 3: What impacts, if any, do you think this change will have on local authority’s’ cash flow and ability to pay precepting authorities? (local authorities and other interested parties)

The change will have financial implications for all councils. The Government should work with both billing authorities and preceptors, to assess how cash flow and ability to pay precepting authorities will be affected by this change.

There will also be a loss of income to councils from lost interest from the collection fund which also needs to be part of this assessment.

Question 4: Do you feel you have a good understanding of how council tax revenue is used by your local authority?

This question is aimed at taxpayers.

Question 5: Do you agree further information should be provided on how council tax is spent? Why/Why not? How should this information be presented?

The LGA considers that councils are transparent in the way they present information about their spending and finances. Many councils already opt to provide additional hard copy information about spending alongside council tax bills. Further information is also regularly signposted online alongside digital communications and billing.

Question 6: Do you feel you have a good understanding of the support offered by your council and how to claim this? How might this be improved?

Question 7: What further information, if any, do you think would be helpful to see on this support? How should this be presented?

These questions are aimed at council taxpayers.

The LGA considers that it should be made as easy as possible to claim council tax support. There is a widely recognised issue related to Universal Credit, that some residents are unaware that they need to make a separate claim for Local Council Tax Support (LCTS). The Department for Work and Pensions should strengthen its communication to claimants, and improve data-sharing with councils, to ensure claimants who may be eligible for LCTS are encouraged to contact their local council.

Question 8: Do you agree with the proposed new name and definition of the disregard, as set out above? Why/Why not?

We have heard from members of the public who are concerned that the language in the Act used for the discount is off-putting. We have also heard from councils saying they have to award the disregard in accordance with the law, so they have to use the same language to check whether recipients of the disregard are entitled to it. A name change would appear to be sensible.

Question 9: What are your views on whether the proposed definition is consistent with the existing eligibility for the disregard? [Local authorities and other interested parties]

We do not have a view on whether this new definition is materially different in practice. The LGA would refer the Government to the replies of member authorities to this question.

Question 10: Have you, or your family members, experienced any barriers to claiming this support? Please describe.

This question is aimed at council taxpayers.

Question 11: Are you aware of any households facing barriers when accessing this support? Please describe. [Local Authorities and other interested parties]

We do not have a view on this question.

Question 12: What, if anything, do you think could put someone off applying for this support?

This question is aimed at council taxpayers.

Question 13: What do you think the Government could do to improve access and accessibility to this disregard?

We do not have a view on this question.

Question 14: What are your views on a Government provided (but not prescribed) form that councils and taxpayers could use to improve consistency of claiming the disregard in England? How should the Government incentivise councils to use such a form?

Based on past experience, councils would welcome a digital and paper form provided by the Government which they could opt to adopt.

Question 15: What are your views on the disregards set out for carers and apprentices?

We agree that it would be appropriate to update the income thresholds for these disregards. The impact of any increase in entitlements should be compensated by central government.

Question 16: Do you believe the current eligibility criteria for apprentices and/or carers is appropriate?

We do not have a view on this question.

Question 17: Are there any other disregards which should be considered in respect of certain cohorts who do not fall within the current disregards?

The LGA strongly supports a nationally funded council tax exemption for those leaving care up to the age of 25. This is seen as one of the most direct and effective ways to prevent care leavers from falling into financial hardship when they are starting out. One way of ensuring that this is funded would be for it to be treated as if they were mandatory exemptions in the resources adjustment proposed in the Fair Funding Review 2.0.

Manchester City Council introduced a discretionary policy from 1 April 2025 which effectively provides an exemption from council tax for the terminally ill. If the Government thinks that this should apply in every billing authority it could consider a nationally supported exemption through the taxbase.

Question 18: Do you or anyone in your household fit into one of these cohorts? If so, what would be the impact of any new forms of support on your household?

This question is aimed at taxpayers and other residents.

Question 19: What are your views on how information is currently provided by councils.

Question 20: What council tax information do you believe could be communicated digitally?

We would support moving to default paperless billing for council tax. However, all taxpayers should retain the right to request hard copies to avoid isolating residents facing digital exclusion, whether due to accessibility, affordability, lack of digital skills, or confidence.

Question 21: In relation to any suggestions in question 20, how could councils ensure this was accessible to all residents?

By making hard and digital copies available to taxpayers, many councils are already taking steps to ensure this information is accessible to all taxpayers.

Councils can identify residents who are “non-internet contacts” based on billing preferences, and use this data, alongside resources like the Lloyds Consumer Digital Index, to better understand and address digital and financial exclusion.

Question 22: What are your views on the current process for challenging a council tax band? What changes, if any, should the Government consider to the council tax band challenge process?

We are not aware of any barriers in challenging a council tax band either through a formal challenge or an informal review. The LGA understands that most council taxpayers represent themselves at the Valuation Tribunal and the Tribunal takes steps to ensure that they find the process accessible.

There are wider issues about bands such as their link to 1991 values which we understand taxpayers can find confusing. As noted above, the LGA has previously called for a fundamental review of council tax.

Question 23: The Government is interested in changing regulations on when councils can request a full bill, or seek liability orders, to a more appropriate and proportionate timeframe.

In terms of an alternative to the current seven days, we note that the standard for credit control is between 28 and 31 days, so that might be appropriate. We would call on the Government to carry out further engagement with councils and debt advisors on a specific proposal. This should strike a fair balance between pressures on taxpayers and the need for councils to collect income. The scale of liability due should be central to this review.

The LGA has called to remove the requirement for the entire annual sum to become payable if an instalment is missed. Any replacement system and timetable for seeking liability should be clear and remove the unfairness from requiring the full bill after one missed payment.

In our 2022 submission to the House of Commons Housing, Communities and Local Government on council tax collection the LGA said that we were in favour of making it easier for councils to recover money without having to go to the courts. We do consider that recovering overdue payments should be made easier, by maximising the tools which are available to councils without having to use the courts.

Question 24: Are there any further steps councils should take before being able to charge for a full-year’s bill? For example, offering alternative payment plans, providing further reminder notices or undertaking welfare checks.

Councils have adopted good practice to make payment as easily as possible. Examples include: encouraging the use of payment defaults like direct debits; making communications clearer and simpler (such as removing complicated language and highlighting any required actions in correspondence); and providing regular reminders around payments via text or email. Further information is available in the submission cited in the answer to question 23.

Councils have also adopted best practise to identify and support residents in financial hardship. Many councils now use data to identify and target support to their most vulnerable customers, and to develop a ‘single customer view’ of debt. This enables councils to offer more integrated support and repayment options to residents in, or at risk of falling into problem debt. For example, the London Borough of Southwark’s Step by Step programme helps residents to consolidate their debt so residents can clear them with one regular manageable payment.

A proposal for councils to implement an Attachment to Earnings for recovery of unpaid council tax from those in employment has remained unrealised, despite successful piloting. Councils would be keen to build on these successful pilots for those who are able to repay, if HMRC was open to share data with all local authorities.

Question 25: Do you believe there are any barriers to councils being able to take the kind of steps set out in Question 24? [Local Authorities and other interested parties]

The implementation of Universal Credit and wider welfare reform has placed uncertainty on Revenues and Benefits services. Councils have also had to sustain and manage revenues and benefits services in the face of a persistent shortfall in administration funding. In our Autumn Budget 2024: LGA briefing, we called for Government to recognise and properly resource the long-term role of councils in the benefits system.

Furthermore, as the consultation says, the current system revolves around the liability order which then limits other options for recovery. The LGA is developing proposals for greater consistency and resourcing for advice provision, including debt advice provision, as part of its work on the Crisis and Resilience Fund (which will replace the Household Support Fund and Discretionary Housing Payment) as well as our wider work on local government reform. Promoting financial resilience is also a key strand within the Government's proposals for its forthcoming Child Poverty Strategy. While we welcome this emphasis, we are clear that greater recognition of the role that councils can play in strengthening households' financial wellbeing needs to be accompanied by clear and sustainable resources to fund community-based advice.

Question 26: What other ways can councils support individuals when they miss a council tax payment?

We do not have any additional views on this issue.

Question 27: Do you agree that the Government should introduce a cap on the reasonable costs that a court can award for a council’s costs for an application for a liability order?

We note that following the ‘Nicolson’ case billing authorities are required to set out a breakdown of their ‘reasonable costs’ and that they may vary according to location and how councils organise processes. Therefore, a cap on reasonable costs could lead to a new burden on councils whose costs reasonably exceed a national cap. This would need to be addressed through new burdens funding

Question 28: What do you think this cap should be set at? Please explain your answer.

We do not have a specific proposal. As we said in our answer to question 27, if councils have administrative costs which are not covered by a capped amount, any shortfall should be covered by new burdens funding.

Question 29: Should the cap apply when seeking a liability order on second or empty homes?

We do not see any reason why second or empty homes council tax should be treated any differently from any other council tax liability.

Question 30: Do you believe the current enforcement is or is not proportionate in the context of council tax collection? Why/why not?

The current system ensures that over 97 per cent of council tax is collected in the year in which it is due, but please see answers to questions 23 to 25.

Bailiffs should only ever be used as a last resort. Before it gets to that stage, people will have been encouraged to apply for financial support by their council.

Question 31: What are your views on ways enforcement could better reflect the needs of those in financial or other hardship?

As we have indicated we would like to see as much debt recovered via arrangements that do not involve the need to seek a liability order. However, the protection of council funding must also be a key consideration so we would expect to see any possible changes piloted.

Question 32: What are your suggestions on alternative or additional measures to ensure council tax is paid?

Please see the reply to questions 24 and 25 for some examples.

Question 33: What are your views on the current methods available to councils to collect council tax?

We do not have any additional suggestions for payment methods, as councils already offer a broad variety of ways to pay their council tax.

Question 34: How else do you think council tax could be efficiently and fairly collected?

Question 35: Do you have any views on anything else related to council tax administration which has not been covered in this consultation and call for evidence? If so, please provide them here (250-word limit).

We do not have any additional views on these issues.

Question 36: Do you have any views on whether any of the proposed changes in the consultation will have any disproportionate impacts on any particular groups with protected characteristics compared to others?

The LGA would refer the Government to the replies of member authorities to this question.

Luke Masters, Adviser (Local Government Finance)

Email: [email protected]