Council Tax Debt hits £7.4 billion as MHCLG figures confirm record arrears
New government statistics confirm that Council Tax arrears across England have reached £7.4 billion – the highest figure on record, and the fifth consecutive year in which the total has grown.
The Ministry of Housing, Communities and Local Government (MHCLG) published its annual collection rates report at the end of June 2026, covering the 2025-26 financial year. Combined with £2.5 billion in outstanding non-domestic rates, the total amount of unpaid local tax across England now stands at nearly £10 billion.
A deteriorating position
The in-year collection rate for Council Tax fell to 95.6% in 2025-26, a decrease of 0.3 percentage points on the previous year and the lowest figure recorded since enforcement activity resumed post-Covid.
Of the £44.8 billion of Council Tax due to be collected in 2025-26, £1.96 billion was not recovered by 31 March 2026. A further £305 million was written off entirely as unrecoverable.
The story in national non-domestic rates (NNDR) is no different. The in-year collection rate declined by 0.5 percentage points to 96.8%, while outstanding NNDR arrears rose by £228 million.
The compounding problem
The cumulative nature of these figures tells a more significant story.
Arrears brought forward from previous years at the start of 2025-26 stood at £6.6 billion. Of that, only £1.03 billion was recovered during the year, meaning the majority of pre-existing debt remained on council balance sheets at year end, joined by nearly £2.2 billion of new 2025-26 arrears before any write-off.
Council Tax arrears have now grown in each of the last five years: from £4.97 billion in 2021-22 to £7.39 billion at March 2026. Last year’s single-year increase of £748 million was the largest of the period.
Boost recovery rates with Debt Assist
Liberata’s Debt Assist service re-engages residents before enforcement becomes the only option, using data-led segmentation to reach those who have disengaged and routing individuals to the right support based on their circumstances.
Live delivery data from Debt Assist projects shows what earlier intervention achieves:
- 17% of previously uncontactable residents are successfully re-engaged
- 76% of those re-engaged converted to payment within three months
- 88% of vulnerable residents identified are supported into a sustainable repayment arrangement
Debt Assist operates within flexible commercial models, including fixed fee and outcome-linked options.
Source: MHCLG, Collection Rates for Council Tax and Non-Domestic Rates in England, 2025-26, published 24 June 2026. Debt Assist performance statistics from live Liberata delivery data.
A narrow regulatory window
Incoming Enforcement Conduct Board Vulnerability Standards, effective January 2027, will require enforcement agents to demonstrate vulnerability screening. Authorities that have not yet embedded vulnerability identification into their recovery workflow have a narrow window to do so before the obligation falls on their enforcement partners. Debt Assist addresses this directly, identifying vulnerability before enforcement escalates rather than after.
If you would like to understand what Debt Assist could deliver for your authority, complete the form below with your details and we will contact you to discuss your options.
