But some debt charities are concerned that, with many Britons sinking into arrears to pay household bills, income deductions to cover council tax debt will worsen the financial distress of those who were unable to pay.
“If the reason why people aren’t paying is because of far wider financial problems, then it may actually worsen or exacerbate that situation,” said Sue Anderson, a spokesman for Debt Charity Stepchange.
Local authorities are currently the biggest employers of bailiffs but their use has been criticised because of the high costs, as well as the aggressive tactics debt campaigners say some bailiffs use.
Grants to councils have fallen sharply since the implementation of the government’s austerity programme in 2010, and local authorities have become increasingly reliant on council tax, with many unable to balance their books. A third of local authorities have said they will run out of money for statutory services by 2022. Barrie Minney, chairman of the Local Authority Civil Enforcement Forum, which represents councils’ debt enforcement teams, argued the new plan to take council tax debts out of people’s earnings would help people on low incomes. “When we looked at the 4,000 debtors in the pilot project, we found that a good number of them are on low incomes or in gig economy jobs,” he said. “Those are the people we never wanted to send the bailiffs round to.”
Local authorities already have the legal power to deduct money from earnings, but until now they have been unable to access information about where debtors work. In the trial, this will be provided by HMRC.
Britain’s lowest-income households were exempt from council tax until 2014, when the law changed to allow local authorities to levy a discounted rate on their poorest residents. This brought 1.4m households into the council tax net, but around a quarter of these new payers have fallen behind on their payments, according to the Institute for Fiscal Studies.
According to Citizens Advice, the average person who approaches the charity over problems with council tax payments has just £14 of monthly disposable income.
Barrie Strain, acting head of revenues at Coventry City Council, which is participating in the pilot project, said that his authority hoped it would now greatly reduce its reliance on bailiffs; at present it uses them on 12,000 cases a year. If the pilot became national practice, he said “it won’t drive bailiffs out of business, but I hope it will reduce the amount of council business they get to deal with”
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Council tax pilot to recover debts direct from workers’ wages 26 July 2019
We recently told you about a pilot scheme affecting some local authorities in England who are using information sharing powers to recover unpaid council tax debt directly from earnings.
Although we knew that this was a Cabinet Office pilot involving the sharing of HMRC data, detailed information has been scarce and there has been much industry speculation about the project and the implications it will have for payroll and payroll software providers.
Since our initial reports, representatives from the CIPP and ICAEW were invited to discuss this pilot with Cabinet Office representatives and we are now able to share details about the project.
The Digital Economy Act (2017) allows permissive data sharing between specified public authorities for the purpose of managing and reducing debt. Currently councils can only use data supplied by the resident to recover their debts. In this pilot, 29 councils are able to obtain HMRC employer and self-assessment data for a sample of residents who have not paid their council tax. The pilot only affects people who have not paid their council tax for 2018-19 or earlier years and the council has obtained a Liability Order from the Magistrates Court. Each council in the pilot will supply HMRC with a title, forename, initial or middle name, surname, debt address or contact address for around 4,000 debtors to obtain employment and self-assessment information. HMRC will use the council supplied information and compare those details against their
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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