We use cookies to help us improve and protect our services. By continuing to use the site, you agree to our Privacy and Cookies Policy
Close cookies banner
Creditspring logo
does council tax affect your credit score?
does council tax affect your credit score?

Written by:

Does Council Tax Affect Your Credit Score?

Local councils don't provide any information to credit reporting agencies so it won’t affect your credit score or your chances of being approved when you apply for a personal loan.
Instagram LinkedIn TikTok Facebook Twitter

If you've fallen behind on your Council Tax, the good news is that you don't have to worry about it affecting your credit score.

Local councils don't provide any information to credit reporting agencies so it won’t affect your credit score or your chances of being approved when you apply for a personal loan. However, failure to pay your Council Tax will eventually result in penalties and legal action.

Let's look at how your Council Tax payments could influence your credit history and how to handle your Council Tax arrears.

What is Council Tax?

Council Tax refers to the tax system whereby the local authorities collect tax on domestic properties. Some properties are exempted from tax and some people may qualify for a discount.

All homes are put into a valuation band (based on your home's value on 1 April 1991) and each of these bands has a different charge. You can check your Council Tax band online or you can see it on your Council Tax bill.

The liable person for the property will be held responsible for its tax payments.

Council Tax payments are typically made for 10 months of the year, followed by two months with no payments (usually February and March).

The amount of tax you pay will depend on your personal circumstances, how much your home is worth, and how much the council requires to fund its services.

Some Councils prefer you to make your payments over 12 months instead of 10. You can ask your Council if they offer this option as it will make it easier on you to make lower payments.

What Council Tax is used for

Council Tax is used to fund specific services, including:

  • Police and fire

  • Libraries and education

  • Transport and highway services

  • Rubbish and waste collection

  • Environmental health and trading standards

  • Leisure and recreation projects

  • Record keeping and administration

Keep in mind that Council Tax is not used for health services.

Can Council Tax payments improve credit scores?

No, paying your Council Tax bill on time won't help build your credit.

However, some services, like Experian Boost, may allow you to use your Council Tax and other payments to your advantage.

This is because they use the Open Banking system to report certain payments with the goal of increasing your credit score. Open Banking allows banks and other financial institutions to share your personal information with each other securely - with your permission of course.

Keep in mind that credit reference agencies TransUnion and Equifax do not take your tax payments into account when determining your credit score, so your scores with these credit reference agencies will remain unaffected.

Do Tax Council payments show up on my credit file?

Council Tax payments do not show up on your credit file.

If you don't pay your Council Tax bill you may end up receiving a summons, but this won't affect your credit rating either.

Similarly, even if you do keep your Council Tax payments on time it won't build your credit. However, not paying your Council Tax arrears can have more serious consequences.

What happens when I miss a Council Tax payment?

The Council will send you a payment reminder two weeks after you've missed a payment. If you then pay within seven days, there is no need to do anything else from your end.

Your debt will be settled and you can continue making payments toward your Council Tax bill as normal.

If you don't pay within seven days after the reminder, you will receive a final notice. This means you'll have to pay all your Council Tax upfront for the remainder of the year within seven days.

If you fail to pay after this notice, the Council will typically go to court and apply for permission so they can collect the debt. This is also referred to as a 'liability order'. They may also send the bailiff to your residence or deduct money from your pay.

The court may, in addition, deduct money from these benefit payments:

  • Income Support

  • Employment and Support Allowance

  • Jobseeker’s Allowance

  • Pension Credit

  • Universal Credit

If the Council is granted a liability order by the court, you will be liable for the fees. You may also be responsible for the bailiff fees.

How to deal with Council Tax arrears

If you fall behind on your Council Tax payments you should contact your council immediately. You need to tell them about your financial situation as ignoring the debt won't make it go away - rather try and make arrangements, like paying smaller amounts.

Remember that Council Tax is seen as a priority debt, which means that you have to pay it even before you pay your loan instalments or credit card debt.

If you are on a low income, you may qualify for a reduction on your Council Tax bill.

This depends on your circumstances, but you might be able to get discounts for an empty property, as a single person, or if you have a low income.

Applying for a reduction

Here are some ways in which you may qualify for a Council Tax reduction:

  • If you're on a low income

  • If you're a student

  • If you live alone

  • If you get certain benefits (as listed above)

  • If you or someone you live with has a disability

  • If you are mentally impaired

  • If you live in certain counties in England and Wales

  • If you're a member of the armed forces

  • If you're in prison

You can check if you are eligible for a Council Tax discount by contacting your Council.


Will Council Tax arrears prevent me from getting a loan?

Lenders won't know if you have unpaid Council Tax. Even if the debt were to be brought before a judge, the magistrates' court would handle it because failure to pay taxes is seen as a criminal offence, not a civil one.

Does Council Tax affect my credit rating?

No, because the Council doesn't provide you with credit to pay the debt. So unpaid Council Tax bills won't hurt your credit profile or prevent you from accessing further credit.

Can I go to jail if I don't pay Council Tax?

In serious cases, you can be sentenced to jail if you deliberately don't pay Council Tax. In fact, you may be sent to jail for up to three months if the court finds that there is no valid reason why you don't pay your tax. 

Join Creditspring
Are you ready to start your journey with Creditspring?
Check your eligibility