If you've fallen behind on your council tax, one of the first things you'll want to know is whether an IVA can help. The short version is yes: in most cases, council tax arrears — the amount you already owe from a previous or current tax year — can be included in an Individual Voluntary Arrangement as an unsecured debt. Once your IVA is approved, the council becomes one of the creditors bound by it, and the arrears are dealt with alongside your other debts through a single affordable monthly payment.
There is an important distinction to understand, though. An IVA can only cover the council tax you already owe. It cannot cover the ongoing council tax bills that fall due while your arrangement is running. Council tax for the current and future years is a priority household bill, and you'll need to keep paying it as normal on top of your IVA payment.
The short answer
- Council tax arrears can usually be included in an IVA as an unsecured debt.
- Once the IVA is approved, the council is bound by it and can't chase the arrears separately.
- A liability order already granted for those arrears doesn't have to be paid on its own if the arrears are in your IVA.
- Your ongoing council tax is a priority bill you must keep paying while the IVA runs.
- Advice on whether an IVA suits you is free — you only pay fees if you go ahead.
How council tax debt is treated in an IVA
An IVA groups together most of your unsecured debts and rolls them into one monthly payment based on what you can genuinely afford. Council tax arrears sit comfortably in that group, right alongside credit cards, personal loans, overdrafts and catalogue debt. You can see the wider picture in our guide to what debts can be included in an IVA.
When your proposal is put to your creditors, the council is treated the same as any other creditor for the arrears you owe. If enough creditors by value agree to the arrangement, it becomes legally binding on everyone it covers — including the council. From that point, the arrears are frozen and paid through your IVA, and the council can no longer pursue you separately for that money. For a deeper look at how this works, see our page on IVA and council tax arrears.
What happens to a liability order?
Before a council chases arrears, it usually applies to the magistrates' court for a liability order. This is a court order confirming you owe the money, and it gives the council extra powers to collect — such as taking money from your wages or benefits, or passing the debt to enforcement agents.
If a liability order has already been granted, that doesn't stop the underlying arrears from being included in your IVA. Once the IVA is approved, the debt behind the liability order is covered by the arrangement, so in most cases you won't have to pay it off separately. The order effectively becomes part of the pot your monthly payment is settling. Timing can matter here, so it's worth getting advice before enforcement escalates.
What an IVA can and can't clear
Usually covered
- Council tax arrears from previous years.
- The portion of the current year's bill that was already overdue when the IVA started.
- Any liability order attached to those arrears.
Not covered
- Council tax that becomes due after your IVA begins.
- Court fines and some other priority debts, which are treated differently.
Because council tax is a priority debt, a good adviser will always check that an IVA is the right fit before recommending it. If most of what you owe is priority or secured debt, another route may suit you better — which is one of the things we look at when we check whether you qualify for an IVA.
Will it stop bailiffs and enforcement?
Once an IVA is approved, the creditors bound by it — including the council for the arrears — can no longer take enforcement action for those debts, which generally means no further bailiff visits for the council tax included in your arrangement. Before approval, the situation is different, and getting advice quickly can help you find some breathing space. We cover this in detail in our guide to whether an IVA can stop council tax bailiffs.
What does it cost?
There are no upfront fees to worry about with an IVA. The fees for setting up and running the arrangement are taken out of the monthly payments you make, so they come from money you'd be paying anyway rather than being an extra charge on top. Our guide to how much an IVA costs explains exactly how this works, and you can read more about IVAs generally on our IVAs page. For free, impartial money guidance you can also visit MoneyHelper.
How IVA Advice Online can help
If council tax arrears are part of a bigger debt problem, an IVA could give you one affordable payment and protection from the creditors it covers. We'll look honestly at your situation, explain whether an IVA or another solution fits best, and make sure you understand how your council tax would be handled. Our advice is free and confidential, and there's no pressure to go ahead. Get in touch to talk through your options.