Making the most of your Council Tax 'holiday'

If you're worried about making extra payments, now is the time to save

Making the most of your Council Tax 'holiday'

Many of us are currently enjoying the annual two-month break from the monthly Council Tax payment.

See also: Another council moves to three-weekly rubbish collection

See also: Council tax debt crisis: 6 million in £300 debt to councils

But with news that many local authorities are planning sizeable increases it might be worth taking the time now to think about how you'll cover any extra cost come April.

How the increase could affect you

The average Band D Council Tax bill is £1,530, so an added 4.99% (the maximum which can be added without the council holding a referendum) would increase it by £76 a year.

Over 10 months it's only an extra £7.60 to find each month, but along with increases to energy, broadband and TV charges, it could make a significant difference to anyone struggling to pay their bills.

And this is just an example on an average Council Tax bill - though you might not see an increase this high where you live, and some could even see a freeze, it's also possible you'll face an even bigger hike.

If you're worried making the extra payments, you can start preparing for it now by cutting back and making a budget.

Are you on a Council Tax break?

Most people pay their Council Tax over 10 months. This can bring a welcome injection of cash in February and March when no payments are taken.

However, it's easy for this extra cash to be eaten up by day-to-day spending if you don't take some actions early.

Instead, you could move the money into a separate savings account, ready for an emergency or your summer holiday. You could use it to clear any debts you have.

Do you have Council Tax arrears?

One of the most common debts you might have is unpaid Council Tax. Last year Citizens Advice figures showed 13% of people were behind on their bills – which can have serious consequences. Failure to pay can resort in a court summons.

If you are struggling to pay, contact your council to see if you can agree a payment plan you can afford.

Are you paying too much Council Tax?

Not everyone needs to pay the full whack. If you live on your own or are the only adult in the house, you can get a 25% discount. If you're a student living with other students you don't need to pay it at all. There are also reductions for people with low income or disability, depending on some other eligibility criteria.

It's also possible to get your Council Tax band re-evaluated and have overpayments refunded, though you could see your bills go up if the review says your home has been under-valued.

This article is provided by the Money Advice Service.