I may owe thousands in council tax arrears and I feel sick

[Littlespiderseverywhere]

So. I recently switched to UC from tax credits, and I declared my savings to them- about £7700. I knew that the limit for savings on tax credits was £16000, and on UC it's tapered from £6000.

I was also on housing benefit, and council tax benefit. I had made my initial claim for these about 15 years ago when I first moved into a house with baby DS1, and was very poor with no savings at all. Since then the only change of circumstances I had had to report to the council was moving house once.

The council have just emailed me and told me that DWP have informed them that my savings are over £6000, which is their cut off for council tax benefit. I had no bloody idea of this. I must have been told- or asked to declare any savings- 15 years ago when I first applied, but at the time I had nothing, and have no recollection of this.

My savings have been close to or over £6000 for 5-6 years!! I have always lived very frugally through fear of ending up without money again- for me, having an emergency nest egg has been top priority.

I'm so anxious and upset (hence posting at this time of night!). I'm autistic too, and I can feel the worry pushing me towards the edge of not being able to cope.

The council want to see all my bank statements for years back, and I intend to fully comply ASAP. But- as far as I can calculate- I think I will owe them about £6-7000.

Do you think I will be able to offer them a lump sum from my savings- say £3000- and set up a payment plan for the rest? I'm self employed and am not quite even hitting the minimum income floor for the hours I'm working (20 hours p/w- I have a fit note which doesn't really seem to be needed yet because I'm still on transitional protection).

I feel sick with anxiety that I could lose all the savings I've carefully scrimped and saved to build up. What if the car breaks down tomorrow?? I realise that I have only been functioning well all these years because I have been able to live within parameters of my own creation regarding hours worked and having enough money for mine and the kids' modest needs, and I'm terrified of the effect on the DC if I'm unable to remain stable and functioning for them.

Suddenly losing your financial security is going to be a horrible emotional shock, so sorry OP. You can and will deal with this, that horrible feeling of catastrophe will pass. I would try talking to one of those benefits charities if i was you.
I would be thinking about arguing that as this is an honest mistake, and you were not sent a reminder for so long that you should be able to pay it back slowly according to your income.
The rules are horrendously complex and so many already vulnerable/overloaded people have to deal with these nasty shocks.

is that money in your current account counts towards your savings too

Why wouldnt this count? Otherwise people would just keep their money in their current account 🥲 it does suck OP best you can hope is they agree to a payment plan.

👏🏻 well said!!

if people on benefits can live carefully enough to accumulate a small amount of savings to give them a tiny bit of security then that's great. Others will spend more & not have that savings/security.

it is especially important when you are SE, don't have any support from family etc

Don't panic and spend your time doom scrolling in the web!!

It's not surprising people get confused. Every Council in England has its own bespoke scheme for easements to Council Tax for those on low income. I'd not heard of a £6000 cut off but there are all sorts of variations which mean people who got 100% reduction while on legacy ESA get as little as 40% when they migrate to UC.

My own observation, seeing schemes across England, is that once you're earning, even if it's less that the FTE of NLW reductions whittle to nothing very quickly.

The council will presumably have sent out a form at least once a year in March/April to renew your claim to a reduction. Can you check what was said on each occasion?.

Income from (eg) work earnings doesn't usually become 'capital' the second it lands in your account. However if you have 'float' of a thousand or so in there then it will be seen as capital.

You need to be open with them about savings down the years involved. They will then calculate what they think you owe. Go through it with a fine tooth comb. Ask for details of how their CTR scheme has changed from year to year. Check if they were sloppy about making changes clear.

If you need help with that visit an advice agency such as Citizens Advice.

Once you've crystalised what's owed ask them for a payment plan that you can afford.

Councils' schemes vary, but I don't know if they can just do what they like or if there are certain parameters they have to stick to.

My council has a £16k cut off, but for savings between £6k and £16k, they increase the amount that you have to pay. If your council is similar, OP, you may find that you're not liable for the full amount for quite a chunk of that time, so try not to panic until you know how much they think you owe them.

In my experience, most councils would agree a payment plan, and if you use some of your savings to pay off a chunk of the outstanding, you may find that the instalments you'll have pay for the rest may well be manageable. It will also be worth explaining that you're vulnerable because of your autism.

Council tax schemes are a nightmare since councils have been able to set up their own schemes. They vary tremendously. I work in welfare rights and deal with clients in 11 different borough/district councils and a city council. All their schemes are different, and it's near impossible to drill down into what each one does. Some councils give 100% reduction to people entirely dependent on benefits, some give a maximum reduction of 75% for even the poorest households.

I asked one council to send me the full details of their scheme. It was over 200 pages long: the entire benefits handbook covering all DWP benefits, pensions etc is only about 1600 pages!

The important thing is to communicate with them OP, and that's where an organisation like CAB or local agencies may be able to help if you can manage to get hold of them.

Thank you, you and other posters are helping to talk me down!

So it seems probable that the CT rules on savings themselves changed, probably in 2019? I guess that would explain why I didn't know about them. And there were certainly no letters or emails to inform me at that juncture. I will definitely ask them about that.

I have previously tried to talk to the CAB, but I got a chat bot that kind of....hung up on me when I said I was self employed. Does the CAB help self employed people? I mean, my self employment doesn't have any bearing on the matter in hand, really!

Yes, my MIF is based on 20 hours a week. Which should be achievable- things are picking up, although I still worry about dry spells. (Although this week, what with everything, I feel like it should be about 3 hours a week 🤦‍♀️. Got a meeting with the Sendco about DS2, then a delivery, then I should get back in the workshop, but I've got to send all this info to the council and try to call National Debt line again, before school pick up and sodding cubs this evening. All on zero sleep 😖 Ha, they've certainly got a great way of increasing vulnerable peoples' productivity, haven't they!). It would be nice to think I could increase it when DS2 goes to secondary, let's see 🤞

Localised council tax support/reduction schemes have been in place since 2014/2015. And councils can change their scheme every year if they want.

The capital limits (which include all money you have in any accounts/savings/investments/shares/property) for HB over £16k no benefit anything between £6k-£16k has a tariff taken.

LAs set their working age CTR schemes however pensioners are still under the national scheme and their capital limited is different (tariff only taken after £10k)

The money in you current account will count towards your total capital and even though you are now on UC this isn’t a primary benefit so the capital limit for CTR will likely still apply and if your still over £6k then you wouldn’t be entitled to CTR.

Think you’re fighting a losing battle trying to talk sense into this one… seems to be so jealous she’d rather see her relative die in the street than dare access any emergency services (which he has massively funded over the years…). Time and time again people on these threads fail to see that it’s high earners like this paying the taxes so that the rest of the world can have benefits and services. If everyone was like the OP (absolutely no offence to her), there simply wouldn’t be any cash for benefits because they take more than they put in.

JSA is available without means test for 6 months provided you have paid, or been credited with National Insurance contributions in the relevant preceding tax years. There are quite tight rules about the type of contributions too. It used to be called Contribution Based JSA but is now known as New Style ESA.

Beyond 6 months it was means tested as Income Related JSA but that's now abolished and has been rolled up into Universal Credit.

Even if you're not entitled to any cash it's worth signing on to get NI credits for State Pension etc.

You managed to have thousands in savings by not paying council tax?

That's a kivk in the teeth for people like me. I work.part time and receive top up UC per month and I have to pay full council tax.

Having savings is a luxury. Not paying your council tax so YOU feel secure is ridiculous. Council tax is a priority bill and you took your eye off the ball so you could have money in the bank. This grinds my gears. It's bloody hard work to have any savings while living day to day and you take the piss.

Now you're left with money owed. Pay all bills first then try and put money away for a rainy day.

In the first instance, phone the council and discuss your options. Nobody on here can set up any payment plan for you. You messed up, time to pay back what is owed and grow up.

This post has annoyed me. Bragging about how you save money while a lot is us are living day to day AND paying all bills.

Talk to your local Citizens Advice not the national phone line! They will have an existing relationship with your local council and will have seen this before.

Bear in mind that yes you might owe council tax but you should also be entitled to council tax discounts if you are in receipt of UC and disabled. Citizens Advice will help.

I just Googled it, and apparently it doesn't count as "your" savings if it's in an account you can't access. So you could legitimately put money in junior ISAs for your DC.

Oh shit though, now I'm getting confused. That's what the DWP says. But councils could have different rules? 😬

@Littlespiderseverywhere

just thought I'd highlight this post in case you miss it!!

@Littlespiderseverywhere CAB will help anybody though the lack of resources, mainly volunteer advisers, may limit what sort of work they can take on.

If you phone them it's usually option 4 to speak to an adviser or in some areas it's easier and quicker to use whatever means of 'contact us' they offer on the local website.

The national site at citizensadvice.org.uk is a fantastic resource for information but the 'boots on the ground' are local; CA is a federation rather than a single body.

You can find details of your local CA here: https://www.citizensadvice.org.uk/about-us/contact-us/

@OutsiderOfTheClique if you cannot post without being judgemental it's best to stay out of these sort of threads.

My thoughts exactly. The cheek of it!

It's just really sad that she has to find an outlet for her obvious frustration by punching down. It's not a race to the bottom.

I agree with the OP, your response was silly and annoying.

1st thing you need to do is not panic, easier said than done though.

As your self employed the support available is different, you've to contact the business debt line. It's bonkers as it's a personal debt.

The council t.ax relief rules vary per area but they expect the claimant to know regardless of how complex they are. Where I live they request proof every year of accounts and banks.

Just provide them with everything they ask for. This is the last time you'll have to do this so there's some comfort in that as UC communicate directly with about council tax relief. Once they've made the decision then ask about repayment plan again different councils take different stances on this. My council are very much go to court 1st.

With regards to your current account balance being classed as savings the best way to deal with this is to ask your bank to produce your statement the day after your last monthly bill is paid. This then gives an accurate balance rather than an inflated balance because your housing costs will have been paid

Hope you get it sorted

Make the post private then. The post is public for all to see and respond to if required. Sorry I do not sooth the ego of someone who has flouted paying council tax. Some adults need to grow up and act like adults and pay they bills and not cry about it when the debt catches up to them.

Not sure why council asking for bank statements I would check when you opened universal credit claim and correspond the dates with any changes you made via your journal. UC and council have already talked to each other.

Suggest you increase your self prescribed working hours so that you can come off benefits entirely

I don't see how you should owe the whole amount, as if you'd been paying it then after 2k you would have been eligible again?

It shouldn't be a luxury. Everyone should be able to have them. OP may have saved that amount over years putting small amounts in.

This!!!