Martin Lewis 'moved by huge first step' as 'vicious' Council Tax debt collection practices to be improved and access to discounts made easier
Damaging flaws in the Council Tax system in England, including vicious debt collection practices and confusing language on discounts for vulnerable people, are finally set to be fixed. It follows years of campaigning by Martin Lewis and the organisations he founded – MoneySavingExpert.com (MSE) and The Money and Mental Health Policy Institute (MMHPI).
It comes as the Government has today (Wednesday 15 April) published the outcome of its wide-ranging consultation into the English Council Tax system, launched in June 2025. Its key recommendations include the following measures (click on the links to read more):
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The 'Severe Mental Impairment' (SMI) discount will be renamed and made easier to claim.
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Default billing will be changed from 10 monthly payments to 12.
Martin Lewis: 'I'm genuinely moved by this huge first step'
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.
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.
Currently, in England, if you miss a monthly payment, many councils can, within just 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.
The new rules from next April will mean councils must wait two months, not three weeks, to ask for a year's money, and the 'admin costs' will be capped at £100. In a perfect world, it would be even longer and a lower cap would apply, but this is still a hugely welcome change to a 33-year-old process.
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.
Councils must wait longer before chasing missed payments
Under the debt collection reforms:
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Councils must wait 63 days (roughly two months) before they can demand a full year's missed payment. Currently, once a payment is missed, a council can issue a reminder notice after 14 days and then demand the full year's payment seven days later, so 21 days altogether.
As part of its campaigning, charity the MMHPI had said that council debt collection rules should, at the very least, be in line with consumer creditors, which often wait three to six months before demanding full repayment of an overdue debt. Its research showed that nine in ten (91%) of people behind on Council Tax bills could not afford an unexpected expense over £1,000, and a third (34%) could not afford an unexpected bill at all.
The new rules, which will take force from April 2027, mean that households will be given two months to settle their bill, and councils will be required to work with those who owe debts on a "sustainable" repayment plan. -
Debt collection admin fees (known as a 'liability order') will be capped at £100 from April 2027. Fail to pay your full annual bill, and after a week, the council can apply to take your case to court and to ask for a 'liability order' – a letter that lets them take much more aggressive forms of debt collection, including sending in bailiffs.
Costs for this currently vary across England with some councils charging as much as £153. A cap is an improvement on this, though the MMHPI had argued for a cap to be brought in at below £70 (which is the current cap in Wales).
If you're struggling with debts, download our free Mental Health and Debt booklet. To find further support, see our Debt problems guide.
Martin: Catastrophic Council Tax rules are finally changing
When the news first broke that the Government was planning to reform Council Tax last May, Martin filmed his instant reaction. Here's what he had to say (as recorded on 14 May 2025):
Read the full transcript
Martin: "I mean, I'm a bit teary, if I'm honest. In a good way, though, because I just had a win that I wasn't expecting. It's almost sort of – it feels slightly anticlimactic, but it's amazing.
"So I've just got off air, literally just off air after presenting Good Morning Britain. This is all about Council Tax debt collection, which is something, along with my charity, the Money and Mental Health Policy Institute, I've been campaigning on since last November [Martin meant September here]. Because it is the most vicious and aggressive and damaging form of debt collection that is out there.
"If you miss a monthly payment, within three weeks they will ask you for a year's payment, most councils. Then if you don't pay that – and how are you going to pay for a year if you can't afford to pay for the month? – two weeks later, they'll go to court.
"They'll get a liability order, which will normally add £150 on to your costs. And a week later they can have bailiffs in. Six weeks from missing one payment to bailiffs in for the entire year, plus additional costs.
"It is absolutely catastrophic and devastating for people's finances. No commercial company would be allowed to do the same because they have a consumer duty. That means they have a duty to, first of all, do what's in the best interest of consumers.
"And it would take probably six months to a year before they got in the same situation. And Council Tax, have constituents who don't have those rights. So this has been something I have... since we've been campaigning on it.
"And it was something that originally came from the research community of my charity, with all these people who've got mental health and money problems saying this is a bad one.
"So many people for whom Council Tax debt collection has been absolutely catastrophic, and the tipping point that has destroyed their finances because of the aggressive and rapid progression of how much debts they come in and we've been fighting it.
"And the main thing is to say: look, don't suddenly ask people for a year three weeks after they can't pay a month, try and signpost them for debt, help them so they can afford to pay.
"And we had the chancellor of the Duchy of Lancaster, which is a senior member of the cabinet, Pat McFadden, on the show, and I notified him yesterday that I wanted to talk about this, because what often happens when you've got politicians on it and if it's not their department they say, 'Sorry, I can't talk [about this] – I don't know.'
"So I said: 'I don't want you to be able to say, I don't know about this'. And I've had meetings with senior people in the Government on this before. And then at 8 [o'clock] we got a statement, a right of reply, and I was expecting the usual, 'Oh we'll try and do whatever...' And at the end it said: 'We will be launching a consultation'.
"And it was just… I was like, 'what?'. I mean, 'we're launching a consultation'. And then we had Pat McFadden on the show and he said, 'yeah,' he said, 'we're consulting'. I said, 'are you consulting?'. He said, 'we will launch a consultation this week'.
"What he then said is, 'because we yeah, absolutely we will look at this issue that we should not be suddenly allowing them to ask for a year's worth of payments when they've just missed a month, because how are people who can't pay a month going to be able to pay for a year?'.
"Sorry if I'm not being as lucid as I normally am. And, I just, I'm suddenly sitting there afterwards going, 'yes!'. I cannot tell you how many desperate people I have met whose lives have been absolutely ruined by this form of debt collection. We're hearing someone on the show who had bailiffs to their hospital bed.
"And, well, look, I mean, it's only a consultation, but I'm hoping that this is the start of changing things. This has... it's one of those things that people don't talk about but affects millions of people.
"And suddenly it's a campaign win out of nowhere. I'm very happy, slightly confused, trying to work out what work I need to do and a little bit emotional about it. So I thought I'd just record that feeling and try and explain it to you."
MMHPI report exposed 'rapid and aggressive' Council Tax collection processes
An MMHPI report published in 2024 called for action on the "outdated, outmoded and cruel" escalation that can happen when someone falls behind with their Council Tax.
Of the 100 biggest councils in England and Wales, 71 provided information for the MMHPI's report, and of those, almost nine in 10 (87%) said they use the full strength of the law to demand that people pay the full year's worth of Council Tax within three weeks of missing a payment.
The MMHPI also revealed that the current "rapid and aggressive" Council Tax collection process disproportionately affects people with mental health problems. The MMHPI's analysis of nationally representative data showed that approximately one in 10 (10% of) people with mental health problems are behind on their Council Tax bills, compared to 4% of people without such conditions.
The 'Severe Mental Impairment' (SMI) discount will be renamed and made easier to claim
The SMI discount can be worth, at a minimum, 25% off a household's Council Tax bill – and in some cases can mean the bill is wiped altogether. SMI is a medical diagnosis in itself, but the underlying cause could be a condition such as dementia (including Alzheimer's), profound learning difficulties, multiple sclerosis, the result of a severe stroke and others.
MSE's been campaigning to raise awareness of the discount and to make it easier to claim since 2016 – but it remains under-publicised, under-claimed and overly complex for many.
To address this, the Government has now confirmed that, from April 2027, it will introduce a universal application form for all councils in England to use. This will fix the current inconsistency among local authorities and make it easier for people to apply for the discount. It will also bring England into alignment with Wales, where the form was standardised in 2017.
In addition, the Government will change the title of the discount to 'Significant Cognitive Impairment', in alignment with Wales.
The Government is, however, still considering its approach to backdated claims. Currently, while some councils do backdate, they are not legally obliged to – each council can decide their own policy.
Hundreds of thousands of some of the most vulnerable people in society, including many with dementia, Alzheimer's, severe Parkinson's or the effects of strokes, have long overpaid Council Tax.
This is because the horribly named 'Severe Mental Impairment' discount is cumbersome, misunderstood (even by some council staff) and under publicised. We've long pushed for change and I am delighted that our suggestions are being picked up.
There will be one consistent form across all English councils, making it easier for help agencies to offer guidance. The name too will be changed to 'Significant Cognitive Impairment' – though crucially, eligibility will remain unchanged.
We are still waiting to hear whether a consistent backdating policy will also be put in place across all councils.
Default billing to change from 10 monthly payments to 12
Currently, the majority of Council Tax bills in England are paid in 10 instalments (from April to January) – though all English councils MUST allow you to pay over 12 months if you choose to. This will be extended to 12 months by default. However, as many prefer to pay in 10 instalments, you will still have the right to choose this option – a choice that MMHPI had advocated for.
This change will take force from April 2027 for those newly liable for Council Tax or those who move into a new property. Everyone else will be moved to 12-monthly instalments from April 2028.
In addition, the Government says it plans to publish best practice guidance setting out clear expectations on how councils should communicate Council Tax information and support. The Government will also encourage councils to make information available digitally, while maintaining non-digital options for those who need them.
Earlier this year, we warned households not to trust councils' online info about the Council Tax Carers Discount as one in five English and Welsh councils were getting it wrong.
Reform to Council Tax rebanding rules delayed for now
The Government is continuing to look at changing the way people challenge their Council Tax band. In the original consultation, the Government said it recognised that "some households could be paying more than they should and do not have a straightforward mechanism" to challenge this. It asked for evidence on how it could make the process easier.
The Government has today said it will set out further detail on this as part of a separate consultation on introducing the new 'high value' Council Tax surcharge – as announced at the Autumn Budget 2025.
Martin has argued that the current rule, which generally stipulates that you can only formally challenge your Council Tax band within six months of moving into a property (after which it's possible but more difficult), is unfair, as it doesn't give people enough time when first moving in. The MMHPI has said that everyone should be able to formally challenge the band on their property once, with no time limit.
Amongst all the good news on Council Tax from an MSE perspective, it's a shame we've not heard anything about changing the 'six-month' rule on applying to have your band reviewed. This isn't off the table, it's just delayed for now. We'll keep pushing.
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