‘Grotesque’ council tax system set for biggest change in 30 years. Here's what it means for you

Consumer champion Martin Lewis has hailed the biggest council tax debt collection changes for more than 30 years with a swathe of reforms to reduce “unnecessary stress and anxiety”.

The government has announced that people who fall behind on their bills will no longer be forced to pay the full year’s amount just two weeks later, as current rules demand.

From next April, households will be given 63 days, roughly two months, to settle their bill and a requirement for councils to work with them on a sustainable repayment plan.

Council tax bills will be paid over 12 months by default, rather than the current 10, lowering monthly repayments for low-income households.

The amount of money councils can charge as an administration fee to recover debts has also been capped at £100.

The severe mentally impaired council tax discount will also be renamed to reduce the stigma that puts off vulnerable people applying for support.

The changes come following campaigning from money guru Lewis, who has described the council tax debt recovery system as “grotesque”.

“Council tax debt collection is so aggressive it’d make banks blush,” said Lewis, founder of MoneySavingExpert.

“It’s the most vicious and damaging form of legal debt collection out there – causing counterproductive misery for millions. We’ve spent the last 18 months campaigning hard to change this hideous system, and having seen so much pain caused by it, I’m genuinely moved by this huge first step towards making things better.”

Lewis’ Money and Mental Health Policy Institute charity began campaigning on the issue back in 2024 after warning around two million people with mental health problems in the UK had fallen into a ‘council tax trap’.

The trap sees councils demand a year’s worth of bills just three weeks after someone misses a payment. That currently averages almost £2,400 for a Band D property.

“How people who can’t find a month’s money are expected to find a year’s I don’t know,” added Lewis. “Yet if they can’t pay, within just three more weeks, they are often taken to court, have ‘admin costs’ added, and soon see bailiffs sent in.

“For councils too, it is worth remembering that this grotesque system is often catastrophic for people’s finances and wellbeing, leaving many needing more help and support, and ultimately the same council having to pick up the pieces.”

Read more:

• Benefits, water bill hikes and TV licences: All the tax year changes in April 2026 you need to know
• Should we have to pay more council tax from April?
• People are still getting threatened with prison for council tax debt. This has got to change

The government has now agreed to make changes after responding to a consultation on modernising and improving the administration of council tax on Wednesday (15 April).

“Too many families are facing aggressive enforcement action, with people left terrified of bailiffs knocking on the door because one month’s council tax bill was missed,” said local government secretary Steve Reed.

“We will stop this and make the system fairer by supporting families who fall behind. I want to thank Martin Lewis and his charity for their tireless campaigning, shining a light on this crucial issue affecting millions of people.”

Has council tax gone up?

Council tax has just risen across the UK in April 2026.

In England, most councils were permitted to raise council tax by just under 5%.

Rises in Scotland were larger in 2026, which was the second year when local authorities were able to raise council tax after years of freezes. That has seen bills increase by up to 10% in some areas, such as Aberdeenshire.

Welsh households saw an average increase of 4.9%, although some areas have seen bigger hikes.

Council tax is considered to be a regressive tax and currently hits young people, low earners and those living in less prosperous parts of the country disproportionately when compared to higher earners.

Debt charity StepChange said council tax is now the second most common type of household arrears amongst its clients, with almost one in three clients (31%) behind on the charge.

Average council tax arrears top £2,531 year to date, around double the average from before the pandemic.

Over one in three (36%) UK adults told StepChange they are worried about their ability to pay their council tax over the next six months, a figure which has increased by 13% since January. 

Vikki Brownridge, StepChange chief executive, 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.”

A total of three in 10 people who call National Debtline are struggling with council tax bills.

Grace Brownfield, head of debt advice communications at National Debtline, said change is “long overdue”.

“We hope these changes will see people struggling to pay given the support they need, rather than being pushed further into financial hardship,” she added.

Can you go to prison for failing to pay council tax?

Scottish and Welsh governments have removed the possibility of going to prison for failing to pay council tax but it remains a threat in England.

Research from StepChange found one in 20 councils warn people in their first communication after falling into arrears that they could face prison for failing to pay.

But there is a low risk of jail. Imprisonment is only for “wilful non-payment” or “culpable neglect”, rather than people who cannot afford to pay. There have been just four cases of imprisonment since 2020, the debt charity said.

National Debtline’s Brownfield said the threat of prison is “often used to pressure people into paying more than they can afford”.

Despite warnings that it is “outdated”, the government has opted to maintain the possibility of going to prison for failing to pay council tax in England.

Toby Murray, policy and campaigns manager at Debt Justice, said: “We are deeply disappointed that the government has refused to act on some of the worst aspects of this system. 

“People in debt will still face bailiffs at the door, the threat of imprisonment for non-payment remains, and liability order fees of up to £100 will still be piled onto existing arrears. This is persecution of people who are already struggling.”

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