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Sunday, July 14, 2024

Leeds Council grapples with £90m in unpaid taxes amid economic strain

Households in the city owed more than £90m in unpaid council tax at the end of the last financial year, figures reveal.

Arrears increased after living costs rose and Leeds City Council faced difficulties collecting debts during the Covid pandemic

Figures released under freedom of information rules show the total outstanding was £90.8m at the end of 2023/24.

An increase in arrears over the past decade saw the total rise from around £37.8m at the end of 2014/15.

The council said its record on council tax collection compared well to other cities.

A spokesperson said the council was helping struggling households by giving them more time to make payments.

They said: “Therefore, while the figures for the most recent years appear high, over time this money will be received, with the council aiming to recover 99 per cent of all council tax billed for this year.”

The council said the main reason for the increase was a rise in the total council tax payable, up from £289m in 2014/15 to £470m in 2023/24.

There was a backlog in council tax debt collection after courts were closed during pandemic lockdowns.

Increases in the cost of mortgages, rent, food and fuel also hit people’s ability to pay on time.

The figures show £28m of the current arrears were unpaid from the last financial year, while other amounts had been accumulating over time.

Some £579,000 remained unpaid from as far back at 2010/11, the last year for which figures could be provided.

The spokesperson said: “Debt is only written off as a last resort after exhausting every possible option.

“For anyone facing financial difficulty, we offer a range of advice and support and we would always encourage residents to contact us to discuss their circumstances.”

Changes in the way councils are financed, including reduced grant funding from central government, mean they are more reliant on local taxation than they were a decade ago.

Council tax in Leeds increased by 4.98 per cent for 2024/25 as the authority tackled a multi-million pound budget shortfall.

Andrew Dixon, chairman of council tax campaign group Fairer Share, said the system was in need of reform.

He said: “In theory, council tax is fair and progressive, supposedly based on a property’s value. If your house is worth more, you pay more in tax.

“However, the theory is far from reality because those valuations are based on property prices in 1991.

“In all but name, council tax is a wealth tax for low and middle-income families.”

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