- Council tax arrears rose by £782 million in 2025/26 taking total outstanding debt to £7.4 billion
- More than half of people needing debt advice do not know who to trust for financial help
- Ministers urged to adopt “everyday fixes” to prevent families spiralling into debt
Council tax arrears rose by almost £1,500 every minute last year as ministers face calls to stop struggling households being pushed deeper into problem debt ahead of the Budget.
Analysis by the Centre for Social Justice (CSJ) found that unpaid council tax in England increased by £782 million in 2025/26, taking the total outstanding to £7.4 billion.
Households are now facing further increases in their bills. Average Band D council tax in England rose by £111 to £2,392 this April, an increase of 4.9 per cent. Some councils imposed substantially larger rises, with Worcestershire County Council increasing its share by 8.98 per cent and Trafford by 7.49 per cent.
The think tank warned that opportunities to help families are being missed because communications fail to prompt early action or give people a trusted route to free debt advice.
The findings will be published in Money Mindsets, a forthcoming report produced in partnership with Lowell and Money Wellness, examining how financial knowledge and attitudes affect people’s experience of debt and willingness to seek support.
The report finds that more than half of people in need of debt advice say they “don’t know who to trust for financial help and support”.
It will call on the Government to ensure council tax communications work “with the grain” of people’s financial behaviours, helping households act before their debts escalate.
Recommendations include clearer reminder notices informed by behavioural research, greater use of digital communications alongside letters, and MoneyHelper-branded information sheets directing those in arrears to trusted, free debt advice.
Ben Gregg, Head of Welfare at the Centre for Social Justice, said:
“Council tax arrears are dragging struggling households deeper into problem debt. Yet the way this debt is collected is firmly within the Government’s control.
“Too often, opportunities to help people avoid a debt spiral are missed because people do not understand what they have been sent, put off responding, or simply do not know who to trust.
“Clearer communications, earlier support and a trusted route to free advice are everyday fixes that could make a real difference. Ministers should build them into the council tax reforms already underway.”
John Pears, CEO of Lowell, said:
“Council tax debt is one of our biggest concerns at Lowell. Bills keep rising, and more and more people cannot afford it. Instead, they are left in serious debt at the mercy of a system that just does not work.
“Our customers have been telling us for years that many councils rely on legal threats and aggressive enforcement and they don’t know where to turn for help.
“This is why research like the Money Mindsets report is so important. The Government and councils need to recognise that a better approach helps them and it helps people in debt. We can’t afford to miss this opportunity to reform council tax for the better.”
Adam Rolfe, Policy and Public Affairs Officer at Money Wellness, said:
“Council tax arrears come up in more than a third of the cases we see. People fall behind because they can’t keep up with the cost of living, and under the current rules, missing one payment can mean being asked for the whole year’s bill within weeks, which only pushes them further into debt.
“The government’s changes are welcome, but councils don’t need to wait for them. They already have the discretion to give people more time and to point them towards free, trusted debt advice at the first missed payment, and we’d urge them to use it now.”
Lowell’s latest Financial Vulnerability Index found that nearly half of households had no emergency savings, leaving many with little protection against further increases in essential bills.
The Government has announced that councils will be required to issue both a reminder and a final notice before households lose the right to pay in instalments, alongside extending the time before the full annual bill can be demanded.
The think tank welcomed the changes but said additional warnings must be designed to encourage people to engage and seek help earlier.
Money Mindsets will set out a wider programme to improve financial education, creditor communications and access to debt advice.
Notes to editors
Council tax figures are drawn from MHCLG’s Collection rates for Council Tax and non-domestic rates in England, 2025 to 2026. Outstanding arrears increased by £782 million during the financial year, equivalent to approximately £1,488 a minute, rounded to £1,500. The £7.4 billion total includes arrears accumulated over previous years.
Money Mindsets is a forthcoming Centre for Social Justice report produced in partnership with Lowell and Money Wellness.
Media contact
Matthew Walsh
matthew@mippr.co.uk
07754 786 789
A CSJ spokesperson is available for interview.