Debt Rescue Scheme testing begins and Universal Credit data used for Council Tax reduction

From April 2025 the Welsh Government is testing a new Debt Rescue Scheme in Merthyr Tydfil, Blaenau Gwent and Newport, and is making it easier to get help to reduce Council Tax bills by using Universal Credit data¹. Both measures are set out in an Easy Read consultation document, "Making Council Tax collection fair and easy to manage", published in April 2025¹.

The document states that the Welsh Government wants to change the law to collect unpaid Council Tax in a fair way, and that it aims to help councils collect debt fairly and encourage people to ask for help early¹. It also sets out proposed changes to the timing of enforcement. Under the plans, households should not be asked to pay the full amount until 62 days have passed since a payment is missed, including 21 days after a final notice has been sent, meaning a household would miss three payments before the council can take action to collect the debt¹. Councils would be able to go to court for a liability order at least 63 days from a missed payment, compared with one day after the full amount is due under current rules¹.

The document also proposes that a final notice can only be sent once more than 41 days have passed since a payment was missed, and should be sent more than 14 days after the last reminder¹. A reminder notice would show the amount owed but would not set a deadline¹.

The document gives background on the Welsh system. It says the Council Tax Reduction Scheme was created in 2013 to help people on low income and has been updated every year to match the cost of living¹. In 2019, the Welsh Government ended the risk of going to prison for not paying Council Tax and introduced the Council Tax Protocol guidance for councils¹. In 2024, the Local Government Finance (Wales) Act 2024 was passed, allowing property values to be checked and updated in 2028, with the system reviewed every five years¹. The document states that together, people in Wales pay over £2.8 billion each year in Council Tax, part of the total cost of local services of around £11 billion¹.

Why it matters for households

The Universal Credit data measure is intended to make it easier to get help to reduce Council Tax bills, which affects people on low income in Wales who claim Universal Credit¹. The Debt Rescue Scheme is being tested only in Merthyr Tydfil, Blaenau Gwent and Newport from April 2025, so households elsewhere in Wales are not in the pilot areas¹. The proposed enforcement timetable changes, if made law, would give households more time before a council can apply for a liability order: at least 63 days from a missed payment rather than one day after the full amount is due¹. The document notes that after a liability order, councils can still take action including asking an employer to take money from pay, taking money from benefits, putting a charge on a property, or making someone bankrupt if they owe over £5,000¹. It also notes that councils can check whether someone can get a discount or exemption, change a payment date, allow payment over 12 months instead of 10, or offer a new payment plan¹.

What happens next

The consultation asks for views by 23 July 2025¹. The document says the Welsh Government will work with councils to make good practice guidance covering how councils contact people who miss a payment, steps for reminders and final notices, checking eligibility for discounts or reductions, and offering payment plans¹.