England council tax debt hits record £7.4 billion as reforms loom

Outstanding council tax debt in England reached £7.4 billion, up 11.3% from £6.6 billion at the end of 2024-25. The Ministry of Housing, Communities and Local Government released the total on 24 June 2026.

The bill falls on around 25 million households in England, and much of the system has not been reviewed since council tax began in 1993. Under current rules, a missed payment can trigger a reminder in about two weeks, a final notice seven days later if the bill is still unpaid, and then a liability order that can lead to enforcement.

The government's 15 April 2026 consultation response on modernising council tax administration sets out reforms that will make bills easier to manage, remove barriers to support and add safeguards against aggressive debt collection. It also details practices ranging from immediate demands for lump-sum repayment to liability orders that can lead to bailiffs being sent in without a payment plan or welfare check. The package will be considered further ahead of a future Spending Review.

One key change would force councils to wait 63 days before demanding payment for a full year's council tax, while debt-collection administration fees would be capped at £100 from next April, according to MoneySavingExpert. Martin Lewis called the current system "the most vicious and damaging form of legal debt collection out there" and described the changes as a huge first step.

One in three people coming to StepChange are behind on council tax, and a quarter of National Debtline clients have council tax arrears, with 68% of those clients also facing another vulnerability, according to the Money Advice Trust. Council tax arrears are a priority debt. Every council has a scheme to help people manage payments, and residents can ask to spread bills over 12 months instead of 10, which lowers monthly payments.