United Kingdom has introduced sweeping reforms to the council tax system aimed at giving vulnerable households more time and support to manage outstanding bills, in what ministers describe as a long-overdue effort to modernise an outdated framework.

These reforms mark the first significant overhaul of council tax administration since 1993. The current system has become increasingly misaligned with modern financial realities, often leaving households exposed to sudden and severe enforcement measures that can trigger financial distress.

According to Local Government Secretary, Steve Reed, “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.”

“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.”
Steve Reed

Per the current regulations, homeowners are required to pay their whole yearly council tax bill within two weeks if they fail to make even one monthly payment. Critics have long maintained that low-income and vulnerable people are disproportionately impacted by this arrangement, which exposes them to aggressive recovery proceedings and forces them into unsustainable debt.

From next year, the system will be adjusted to provide households with 63 days roughly two months to settle missed payments. Councils will also be required to engage with residents to develop sustainable repayment plans, shifting the focus from punitive enforcement to financial support and resolution.

In a further move to ease financial pressure, council tax billing will default to a 12-month payment cycle instead of the current 10-month structure, allowing households to spread costs more evenly across the year. Additionally, the government will introduce a cap of £100 on the fees councils can charge when pursuing liability orders, the legal mechanism used to recover unpaid council tax.

Minister for Local Government, Alison McGovern, also indicated that, “the way council tax is run is outdated and confusing and has stopped some of the most vulnerable people from accessing the support they need,” adding, “our changes will cut through the complexity and make sure that council tax is fit for the 21st century.”

New Measures Aim to Ease Council Tax Pressure

Under the new measures, councils in England will be required to wait two months rather than the current average of around three weeks before demanding full annual payment from households that miss a monthly instalment.

The reforms also introduce a £100 cap on associated administrative costs, aimed at slowing the rapid escalation of cases into court proceedings and enforcement action.

Martin Lewis, Founder and Chair of the Money and Mental Health Policy Institute and MoneySavingExpert, indicated that, “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.”

He added that, they have 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.

“Currently, in England, if you miss a monthly payment, many councils, usually within three weeks, demand payment for the entire year. How people who can’t find a month’s money are expected to find a year’s I don’t know. 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. No commercial firm would be allowed to do anything close – constituents are treated worse than customers.”
Martin Lewis

The government said proportionate enforcement will still apply to those who deliberately avoid paying council tax, but the reforms are intended to ensure greater protection and support for individuals experiencing genuine financial hardship.

Council tax payments will also be automatically distributed over a 12-month period by default as part of the reforms, however homeowners will still have the choice to continue paying over a 10-month period if they so want. The change is intended to lessen times of financial hardship and assist households in managing expenses more fairly throughout the year.

In addition, ministers will revise the name and definition of the Severely Mentally Impaired council tax discount when parliamentary time allows, with the aim of reducing stigma that may deter eligible individuals from applying.

The government will work alongside disability charities and local authorities to develop a standardised application process, making access to support clearer and less burdensome.