After falling behind on your council tax payments, you might worry how your credit score will be affected. Here’s how council tax arrears affects your credit score.
Thankfully, you don’t have to worry about council tax arrears affecting your credit score at all. Local councils don’t report any data to credit reference agencies. However, not paying your council tax will ultimately lead to fines and court action.
Will council tax payments be visible on my credit file?
No, whether you pay your council tax late or on time, it won’t appear on your credit report.
Will council tax arrears affect my chances of getting a loan?
No. There’s no way of lenders knowing that you’re in council tax arrears. Even if the debt is referred to court, this would be dealt with by the magistrates’ court, because non-payment of tax is regarded as a criminal matter, not a civil matter.
No fines imposed by a magistrates’ court appear on your credit report. They’ll impact your chances of getting a loan indirectly – by reducing your overall wealth.
Tips
Do
Pay your council tax on time. You can set up a direct debit to help ensure no payments are missed.
Don’t
Miss council tax payments so you can pay back other payments. If you’re struggling with debt, seek help from the government’s Money Advice Service MoneyHelper.
Following confusion with his tenancy agreement, John discovered that he owed almost a year’s worth of council tax. He thought it couldn’t have been worse timing, as he was just about to apply for a mortgage.
Luckily, after some research he realised that council tax arrears have no impact on his credit score, and he still had enough savings to fund a mortgage deposit.
* This is a fictional, but realistic, example.
Bottom line
It’s important to pay your council tax on time, or you might suffer fines for late payment. Missing council tax payments won’t impact your credit score though.
Late repayments can cause you serious money problems. See our debt help guides.
Frequently asked questions
Councils prefer to receive council tax payments by direct debit, but you can choose to pay in cash, cheque or by bank transfer.
You can pay as a lump sum, or in 10 monthly instalments, with a break in February and March. Some councils let you change this to 11 or 12 monthly instalments.
You’ll be sent payment details in the post, but you can also find them by phoning your local council or visiting its website.
The first step to appealing against your council tax bill is writing to your council to explain why you believe your bill is wrong.
If it rejects your request, you can escalate your appeal to a Valuation Tribunal.
Most appeals concern the council tax band that their property has been placed in. If you’re unhappy with yours, you can request that the Valuation Office reviews it.
If the Valuation Office finds you’ve been overpaying council tax, you’ll be sent a full rebate backdated until the time you moved into the property.
You’ll usually be sent a letter informing you of your debts.
If this is ignored, councils will seek a liability order from the courts. This will allow them to deduct money directly from your salary, or any benefits you’re receiving.
In extreme cases, a council can hire bailiffs to repossess your assets, start bankruptcy proceedings or apply for a warrant to have you sent to prison.
Finder survey: How important do Brits think it is to have a credit score?
Response
55+
45-54
35-44
25-34
16-24
Very important
42.11%
41.52%
44.92%
52.17%
40.78%
Quite important
39.06%
43.27%
38.14%
34.16%
34.95%
Not that important
9.42%
8.77%
12.29%
7.45%
15.53%
Not important at all
5.54%
3.51%
2.12%
2.48%
2.91%
I don't know what a credit score is
3.88%
2.92%
2.54%
3.73%
5.83%
Source: Finder survey by Censuswide of 1032 Brits, December 2023
Read about how different factors can affect your score
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more.
Learn the facts about loan applications and your credit score plus what you can do to minimise the impact.
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