Council Tax and Your IVA, Question by Question
What goes in, what you still have to pay, and the liability-order catch.
Can council tax arrears be included in an IVA?
Yes. The council tax you already owe, your arrears, can usually be included in an IVA and treated like any other unsecured debt. Once the arrangement is approved, the arrears are frozen, the council is bound by the terms, and any qualifying balance left at the end is written off. This can be a real help, since council tax is otherwise one of the harder debts to deal with.
What about my current, ongoing council tax?
That stays your responsibility. Only the arrears that exist when your IVA is set up go into it; your current and future council tax bills are not included and must be paid in full, as normal, throughout the arrangement. Your ongoing council tax is built into your budget as an essential cost, so the payment you make into the IVA is worked out after it is covered.
How much of the arrears can be written off?
The same way as your other unsecured debts. Council tax arrears are not 'preferential', so they are treated alongside your credit cards, loans and the rest: you pay what you can afford over the term, and whatever qualifying balance remains at the end is written off. How much that is depends on your overall affordability, not on the council tax specifically.
Does the council have a say?
Yes. Your local council is a creditor like any other and gets to vote on your IVA proposal. In practice, council tax is often a relatively small part of someone's total debt, so the council rarely holds enough of the vote to block an IVA on its own. Either way, the arrears must be included and the council notified along with your other creditors.
Why might I owe a whole year at once?
This catches many people out. If you miss council tax instalments, the council can apply to the magistrates' court for a 'liability order', which makes the entire remaining year's council tax due immediately, not just the months you missed. So your arrears, and the amount that goes into the IVA, can be much larger than you expect. What is included is whatever you owe at the date of the proposal.
Will an IVA stop the council chasing me?
For the included arrears, yes, once it is approved. From approval, the council cannot pursue you or use enforcement for the arrears in the IVA, and any further costs on them stop. If bailiffs or a liability order are already involved, timing matters, and an interim order can sometimes provide protection while the proposal is considered, so it is important to act quickly and get advice.
Isn't council tax a priority debt?
It is, and that is exactly why folding the arrears into an IVA can help. Outside an IVA, councils have strong powers to recover council tax, including liability orders, enforcement agents, taking money from your wages or benefits, and in rare cases even committal to prison. Bringing the arrears into a binding IVA freezes them and stops that recovery action on the included debt.
What if I fall behind on council tax during the IVA?
New arrears would not be covered. Because only the arrears at the start are included, any council tax you fail to pay during the IVA becomes a fresh debt that sits outside the arrangement, and the council can act on it. It can also put your whole IVA at risk. If you are struggling to keep up, tell your supervisor straight away so your budget can be looked at.
Should I get advice about council tax debt?
Yes, especially if the council is already taking action. A free, impartial adviser can check whether an IVA is the best way to deal with your council tax arrears, or whether something simpler, like an arrangement with the council, a Debt Relief Order or breathing space, would suit you better. Council tax is a priority debt, so getting the right help early really matters.
