Council Tax & DROs: Can a Debt Relief Order Help?

Council tax arrears are one of the most frequently included debts in a Debt Relief Order (DRO) — and since the rules changed in June 2024, the qualifying threshold has risen to £50,000 of total debt and the £90 application fee has been scrapped. For someone with council tax arrears alongside other unsecured debts, that has opened the door to a formal write-off route that was previously out of reach.

Can council tax arrears be included in a DRO?

Yes. According to GOV.UK, council tax arrears are classed as a qualifying debt for a Debt Relief Order. That means they can be listed on the application and, if the DRO is approved, the council cannot pursue you for those arrears during the 12-month moratorium period.

At the end of the 12 months, if your circumstances have not improved, the listed debts — including the council tax arrears — are written off.

The 2024 DRO rule changes explained

The Insolvency Service confirmed two major changes that came into force on 28 June 2024:

• The total debt limit rose from £30,000 to £50,000
• The £90 application fee was abolished

The asset and vehicle thresholds were also raised in earlier reforms. As of 2026, the rules state that an applicant's total assets must not exceed £2,000, and any single vehicle they own must be worth no more than £4,000 (with exceptions for disability-adapted vehicles).

Eligibility — who can apply

According to GOV.UK, to qualify for a DRO an applicant must meet all of the following:

• Owe £50,000 or less in qualifying debts
• Have £75 or less spare each month after reasonable living expenses
• Own assets worth no more than £2,000 in total
• Have lived, worked or owned a business in England or Wales in the last three years
• Not have had a DRO in the previous six years
• Not currently be in another formal insolvency procedure (such as bankruptcy or an IVA)

A DRO application can only be submitted through an authorised intermediary — typically a debt adviser working for an approved organisation such as StepChange, Citizens Advice or National Debtline.

What happens to council tax arrears during a DRO

The 12-month moratorium

Once a DRO is approved, a 12-month moratorium period begins. During this time, the local authority is prevented from taking enforcement action for the listed council tax arrears. That includes:

• Sending bailiffs (enforcement agents) for the listed debt
• Applying for an attachment of earnings order
• Deducting from benefits for the listed arrears
• Pursuing committal proceedings for the listed arrears

The current year's council tax

A DRO only covers debt that exists at the date of the application. Ongoing council tax for the current year is not covered and must continue to be paid as billed. If you fall behind on the current year's bill after the DRO starts, the council can pursue that new debt separately.

What a DRO does not cover

According to GOV.UK, some debts cannot be included in a DRO and remain payable in full. These include:

• Magistrates' court fines
• Child maintenance arrears and Child Support Agency debt
• Student loans
• Secured debts (such as a mortgage)
• TV Licence arrears in some circumstances
• Debts arising from fraud

If a large proportion of what you owe falls into one of these excluded categories, a DRO may not significantly improve the overall position.

The trade-offs of a DRO

A DRO is recorded on the public Individual Insolvency Register for the 12-month period and remains on your credit file for six years from the date it is granted. There are also restrictions during the moratorium, such as limits on obtaining credit over £500 without disclosing the DRO and restrictions on acting as a company director.

These trade-offs are why a DRO is one option among several — others include a Debt Management Plan, an Individual Voluntary Arrangement (IVA), bankruptcy, or simply arranging an affordable repayment plan directly with the council.

How council tax recovery works without a DRO

For context, if council tax arrears are left unaddressed, the recovery process typically follows these stages:

• Reminder notice — usually 7 days to bring the account up to date
• Final notice — the whole year's balance becomes due
• Liability order — granted by the magistrates' court, adding court costs
• Enforcement — referral to bailiffs, attachment of earnings, or deductions from benefits

A DRO application made before bailiff fees are added can prevent those additional costs being incurred on the listed arrears.