Yes — in most cases, council tax arrears can be included in an IVA. Council tax debt is treated as an unsecured debt, which means it can usually be bundled in with your other debts and covered by your single monthly IVA payment. That can come as a relief if you're juggling arrears alongside credit cards, loans and other bills.
It's important to be clear about one thing, though: this only applies to council tax you already owe — the arrears. Your ongoing council tax for the current and future years is a priority bill that you must keep paying as normal.
The short answer
- Council tax arrears can usually be included in an IVA as an unsecured debt.
- Your current and future council tax is a priority bill you must keep paying.
- Once your IVA is approved, included creditors — including the council — generally stop chasing that arrears debt.
- Any liability order for past arrears is normally caught by the arrangement.
- An IVA affects your credit rating and usually lasts five to six years.
Why council tax arrears can be included
When you fall behind on council tax, the amount you owe becomes a debt to your local authority. Because it isn't secured against your home or any asset, it counts as unsecured — the same broad category as credit cards and personal loans. That's why it can normally be listed alongside your other debts in an IVA proposal. Our guide on what debts can be included in an IVA looks at the full picture of what can and can't go in.
What happens to a liability order?
If your council has already taken you to the magistrates' court and obtained a liability order for the arrears, that order relates to a past debt. In most cases, that historic arrears amount can still be included in an IVA. Once the arrangement is approved by creditors, the council — as one of those creditors — is generally bound by it and should stop separate enforcement action on the included debt.
You must keep paying your ongoing council tax
This is the part people most often get wrong. An IVA deals with the arrears that existed when the arrangement started. It does not cover the council tax bills that arrive afterwards. Your current-year and future council tax remains a priority bill, and you need to keep paying it on time. When your IVA payment is worked out, your ongoing council tax is treated as an essential living cost within your budget, so it should be accounted for.
Why priority bills matter
Council tax sits in the same "priority" bracket as rent, mortgage payments and energy bills, because the consequences of not paying can be serious. Building your IVA around a realistic budget that includes these bills is exactly what makes the arrangement sustainable over its full term.
What if new arrears build up during the IVA?
Once your IVA is under way, any council tax you fail to pay from that point on is a fresh debt — it can't simply be swept into the existing arrangement. If you fall behind again, the best thing to do is speak to your insolvency practitioner and your council straight away rather than letting it mount up. Keeping on top of ongoing council tax is one of the most important habits for staying on track, and it's a big part of why your budget is set carefully at the outset.
Is an IVA the right way to deal with council tax debt?
An IVA is one option, but it isn't the only one, and it's usually only worth considering if you have other significant unsecured debts too. If council tax arrears are your main problem, it may be better to arrange a repayment plan directly with your council, or to look at another route entirely.
- If you have some spare income but smaller debts overall, a debt management plan might suit you better.
- If you have very little spare income and few assets, a debt relief order could be an option — some council tax arrears can be included.
- In more serious cases, bankruptcy may be worth considering.
The right answer depends on your full circumstances. Free, impartial guidance is also available from MoneyHelper.
How IVA Advice Online can help
If council tax arrears are part of a bigger debt picture, an IVA may be able to wrap everything into one affordable monthly payment. We'll review your situation, explain whether the arrears can be included, and walk you through how to apply for an IVA if it's the right fit. For free, confidential advice, get in touch.