A major shake-up to Council Tax in England has been confirmed after years of campaigning by Martin Lewis and the organisations he founded. The Government has published the outcome of its consultation into the English Council Tax system, launched in June 2025, and accepted a series of changes aimed at tackling what Mr Lewis has previously described as aggressive debt collection practices and confusing rules for vulnerable households.
The reforms cover how quickly councils can chase missed payments, how much they can add in fees, changes to a key discount for people with serious cognitive conditions, and how bills are spread across the year. Mr Lewis has described the overhaul as a significant step forward.
He said: “Council Tax debt collection is so aggressive it’d make banks blush. It’s the most vicious and damaging form of legal debt collection out there – causing counterproductive misery for millions.
“We’ve spent the last 18 months campaigning hard to change this hideous system, and having seen so much pain caused by it, I’m genuinely moved by this huge first step towards making things better.
“Currently, in England, if you miss a monthly payment, many councils can, within just three weeks, demand payment for the entire year. How people who can’t find a month’s money are expected to find a year’s, I don’t know.
“Yet if they can’t pay, within just three more weeks, they are often taken to court, have ‘admin costs’ added, and soon see bailiffs sent in. No commercial firm would be allowed to do anything close – constituents are treated worse than customers.”
Under the new rules, councils in England must wait 63 days before they can demand payment of the full annual bill after a missed instalment.
Currently, a reminder can be sent after 14 days, and the full balance is demanded seven days later, meaning escalation can happen within 21 days.
The new waiting period, along with a requirement for councils to work with households on a “sustainable” repayment plan, will come into force from April 2027.
Administrative fees linked to court action, known as liability order costs, will also be capped at £100 from April 2027. At present, these costs vary, with some councils charging up to £153.
Mr Lewis said: “It’s such an under-the-radar story as people don’t discuss it enough. Yet typically over 1m people get baliffs sent in by councils each year and over 3m area in council tax arrears. This isn’t small potatoes.”
He continued: “The new rules from next April will mean councils must wait two months, not three weeks, to ask for a year’s money, and the ‘admin costs’ will be capped at £100.
“In a perfect world, it would be even longer, and a lower cap would apply, but this is still a hugely welcome change to a 33-year-old process.
“For councils too, it is worth remembering that this grotesque system is often catastrophic for people’s finances and wellbeing, leaving many needing more help and support, and ultimately the same council having to pick up the pieces.”
Another major change affects the ‘Severe Mental Impairment’ (SMI) discount, which can reduce a household’s bill by at least 25% and, in some cases, wipe it entirely.
The discount applies where someone has a medically recognised condition such as dementia, Alzheimer’s disease, profound learning difficulties, multiple sclerosis or the effects of a severe stroke.
From April 2027, there will be a single, standardised application form across all English councils. The discount will also be renamed ‘Significant Cognitive Impairment’, aligning with Wales.
Mr Lewis said: “Hundreds of thousands of some of the most vulnerable people in society, including many with dementia, Alzheimer’s, severe Parkinson’s or the effects of strokes, have long overpaid Council Tax.
“This is because the horribly named ‘Severe Mental Impairment’ discount is cumbersome, misunderstood (even by some council staff) and underpublicised. We’ve long pushed for change and I am delighted that our suggestions are being picked up.
“There will be one consistent form across all English councils, making it easier for help agencies to offer guidance. The name too will be changed to ‘Significant Cognitive Impairment’ – though crucially, eligibility will remain unchanged.
“We are still waiting to hear whether a consistent backdating policy will also be put in place across all councils.”
The default payment schedule will also change. Most households currently pay over 10 months, though councils must allow 12 if requested.
From April 2027, new taxpayers or those moving home will pay over 12 months by default, with others switched from April 2028. Residents will still be able to opt to pay over 10 months if they prefer.