Council Tax Arrears, Breathing Space and Debt Relief Orders

When CTR Is Not Enough

Council Tax Reduction helps with the current year's bill, but it does not wipe out arrears from previous years. If you fell behind before you claimed CTR — or if your council's scheme only covers 80% of the bill, leaving you unable to afford the 20% minimum payment — arrears can accumulate quickly. Once they do, the council has statutory enforcement powers that move fast: a reminder notice, then a final notice, then a court summons and a liability order, and eventually enforcement agents (bailiffs) at your door.

If you have council tax arrears, the guidance below is not a substitute for professional debt advice. Contact StepChange, National Debtline or Citizens Advice immediately — their help is free, confidential and regulated.

Breathing Space

The Breathing Space scheme (formally the Debt Respite Scheme) gives you legal protection from enforcement for 60 days while you get debt advice. During a standard breathing space:

• Your council cannot start or continue enforcement action for the council tax debt
• No interest, penalties or late-payment charges can be added
• Your council cannot contact you about the debt (though it can continue to issue current-year bills)

A debt adviser at an approved provider (StepChange, National Debtline, Citizens Advice, or another FCA-authorised debt advice agency) starts the breathing space by registering it on the Insolvency Service's electronic system. You do not apply directly to the council.

There is also a mental health crisis breathing space, which lasts as long as the crisis treatment plus 30 days. An Approved Mental Health Professional (AMHP) must provide evidence that you are receiving mental health crisis treatment; a debt adviser handles the breathing-space application.

During breathing space, continue paying your current council tax instalments. The breathing space only protects existing arrears — it does not cover new charges. If you stop paying the current year's bill, a new debt accumulates outside the protection.

Debt Relief Orders

A Debt Relief Order (DRO) is a formal insolvency remedy for people who owe less than £50,000, have less than £75 per month spare income, assets worth less than £2,000, and no vehicle worth £4,000 or more, among other conditions. Council tax arrears can be included in a DRO.

Once a DRO is granted, it lasts 12 months. During that period, creditors — including the council — cannot take enforcement action. At the end of the 12 months, the included debts are written off entirely. There is no application fee.

A DRO has consequences: it appears on your credit record for six years, and you face restrictions on obtaining credit or acting as a company director during the moratorium year. But for someone on a very low income with no assets and council tax arrears they cannot repay, it can provide a clean start.

You apply for a DRO through an approved intermediary — typically a debt adviser at Citizens Advice or another authorised agency. You cannot apply directly.

Liability Orders

If the council has already obtained a liability order from the Magistrates' Court, it has broad enforcement powers: attachment of earnings, deductions from benefits, enforcement agent visits, or a charging order on your property. A summons cost is set by the council and is separate from enforcement-agent fees. For enforcement cases started on or after 1 May 2026, the statutory agent fee is £79 at the compliance stage and £247 at the enforcement stage, plus 7.5% of any balance over £1,900.

Even after a liability order, the council can agree to a payment arrangement. Write to the revenues team proposing a weekly or monthly amount you can afford, supported by a simple income-and-expenditure statement. If the council has instructed enforcement agents, you can still negotiate directly with the council — you do not have to deal with the enforcement agents.

If you cannot afford any payment, that is exactly the situation where a debt adviser should be involved. Free help is available from:

• StepChange — online debt advice and structured plans: stepchange.org
• National Debtline — phone and webchat: nationaldebtline.org
• Citizens Advice — local offices and helpline: citizensadvice.org.uk
• MoneyHelper — government-backed guidance on debt options: moneyhelper.org.uk

CTR and Arrears Are Separate Problems

Applying for Council Tax Reduction does not clear existing arrears. It reduces or eliminates the current year's bill going forward from your claim date (and potentially one to six months earlier if backdating applies). If you have both a CTR claim and existing arrears, you are dealing with two parallel tracks: the CTR claim through the benefits team, and the arrears through the revenues or enforcement team.

The Council Tax Reduction in England guide covers the full claim process and points you to the right free advice for arrears. It does not advise on debt, and neither should anyone who is not a regulated debt adviser.

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