Council tax arrears hit a record high of £7.4bn as a crisis brews for cash-strapped authorities.
The balance owed to English councils increased by £800m in the 12 months to March, according to data from the Ministry of Housing, Communities and Local Government (MCLG).
It comes before the Government places new restrictions on council tax collection practices next year, after a campaign led by Martin Lewis against what he called “vicious” methods.
Under the current system, a local authority can demand a full year’s payment just 21 days after one missed council tax bill. From next year, councils will have to wait 63 days before pursuing arrears.
Experts warned that arrears could worsen as a result of Labour’s changes to debt collection.
Mike Warburton, The Telegraph’s tax expert, said: “There is a risk some people will take advantage of any relaxation in the rules.
“There is clearly a balance to be drawn here between helping vulnerable people cope with the rising cost and complexity of council tax and fairness to other council tax payers,” he said.
Helen Undy, of Martin Lewis’s Money and Mental Health Policy Institute, said: “Research shows that when councils take a more supportive approach to debt collection, they do not see a drop-off in collection rates.”
Some £2.2bn of council tax was not collected for the financial year 2025-26, a 16pc increase from the previous year, the MCLG said.
The rise in arrears coincided with most councils increasing tax bills. Nine in 10 local authorities increased the levy by the maximum 5pc for the year 2025-26, taking the average bill to £2,280.
The average bill for this year is £2,392, but this doubles to £4,784 for second homes after a council tax premium was introduced last April.
James Cleverly, the shadow housing secretary, said: “It’s little wonder people can’t pay. Hard-working people struggling with the cost of living face bumper tax bills, with the average family in a Band D home staring down the barrel of a cumulative £1,143 increase across this parliament.”
