Pay council tax over 10 months? There are two months a year when you’ve got extra money spare. But what do you do with that money? Save, invest or spend?
Council tax is another one of those priority bills that must be paid above all other things. It may sound quite intense, but if you don’t pay then you could actually face imprisonment!
While prison is at the extreme end of what may happen for non payment of council tax it could happen, and there are around 100 people imprisoned each year in England and Wales for failure to pay.
However, this isn’t about what happens when you don’t pay. I’d rather look at what happens at the end of each year after you’ve cleared it.
Council tax payments
Council tax payments are banded by the value of your home (as they were valued in 1991!). The cheapest band is A and the most expensive is an H (this is for England and Scotland).
Payments are normally divided into 10 monthly amounts over the course of 12 months. You start paying them in April (usually after they’ve put a price rise!) and will finish the annual payments in January.
The amounts you pay also vary depending on where you live in the country. The average Band D council tax set by local authorities in England for 2016-17 was £1,530. This works out at £153 a month when you pay over 10 months.
Spread the payments further
Some people (and some local authorities) request to pay council tax over 11 or 12 months. This can make it far easier to spread costs out if things are tight financially.
Not all councils will allow this as a matter of fact, but if you go through your expenditure and income with them they should allow you to stretch the payments over a longer period (ours has before). From 1 April 2013, the government changed legislation to allow you to choose to change the payment period – so don’t let them tell you no.
The same “average” amount of £1,530 would be £127.50 over 12 months. That works out at a saving of £25.50 a month versus paying over 10 months.
For some, this might not sound like a lot, but if you scrimp each month then this could make a real difference in your monthly budget.
However, although you’ve managed a saving each month, if you could pay higher you could have an extra (on average) £306 for the two non-payment months.
So you need to balance out whether you can really afford to pay it over 10 months or the two months free would be more cost-effective for you.
Council tax-free months
If you can manage to pay your council tax over 10 months, it means that February and March each year you will have more money.
This will give you (based on an average band D property) £306 over two months as free spare money!
It will also give you three options; do you spend your spare money, do you invest it or do you save it?
When I suggest spending the money you have spare each month from council tax, I’m not suggesting you should blow the lot on the high street on cheap shoes!
There are some other things it may be worth thinking about first.
While you may have cleared this year’s council tax, have you paid everything else you owe? Look to make the payments to clear debts for a previous year in council tax, any late payments for rent, TV licence, water, gas, electric etc.
Getting priority debts clear will feel like a weight off your shoulders and should see the monthly amount you need to pay out start to come down, as you won’t be having to play catch up all the time.
If you have no other priority debts, then why not look to spend some of the spare council tax money on any other debts you have.
Do you have an overdraft with high fees? The two months of spare payments could see a big knock out of it.
How about a credit card that needs shrinking? Or a store card? Catalogue? How about clearing your mortgage off that little bit sooner?
While a few hundred quid may not clear some of your debts outright, it will really help put a dent in them.
Maybe now is the time you need to invest a bit in your own home. Do you have a leaky tap that you’re ignoring, or maybe the boiler has seen better days?
Spending a bit of money improving your home and giving it a bit of TLC may see you lower your bills overall, and will put off more costly repairs in the future.
If you’ve planned or are planning a holiday then a few hundred will be very helpful to pay that last bit off your trip or act as an extra bit of spending money.
In some circumstances, a couple of hundred pounds could pay for a trip away out right if you’ve very thrifty!
Investing doesn’t have to mean that you are joining the ranks for the Dragon’s Den. If you invest your money in yourself, then you could see good return in the future.
Start a course
Undertaking some personal development will be great of your CV. It will also teach you skills to see you go forward in your chosen (or perhaps new) career.
If you work in a certain professional area, there may be an institute you could join that shows you specific industry-related training (ie CIPD, AAT etc).
Personal development doesn’t have to cost a bomb, as you can even learn a new course through great cost-effective packages on Groupon.
To be honest, you don’t even need to spend money when there is a load, of course, you can enrol on for absolutely no money then learn for free.
Start a business
Maybe you’ve had your heart set on being your own boss? Now might be the opportunity to make that dream a reality.
Do some research first to make sure that that the market you’re aiming at needs your services – then go for it.
With a few hundred pounds that could be your set up costs. Then you’re off to market yourself (make sure you launch a website to tell people who you are) and provide excellent services.
Your business could be:
- Dog walker
- Graphic designer
- Cake maker
- Music tutor
- Balloon modeller
Whatever your skill; find what you love, say goodbye to “the man” and become your own boss.
Take advantage of your ISA
As it’s coming up to the end of the financial year, it may be a good idea to fill up an ISA with getting some tax free savings too.
Every penny will help and a few hundred more will certainly help.
If you’re planning to save your money then the interest rates you get aren’t really that great, but you could earn more interest than not leaving in in a bank at all.
It’s still worthwhile putting money aside, even if it’s a portion of it.
Whether you are starting, adding to or completing your emergency fund, a couple of hundred will pave to way to a bit of peace of mind.
The idea of an emergency fund is putting some money aside for a rainy day. Hopefully, you’ll never need to touch it and it will sit there forever. However, if there is an emergency like there is a breakdown – you car, washing machine, fridge, kids school shoes – if you don’t have spare cash in your budget you can dip into your emergency fund.
Using your emergency fund will get you out of a potential big spend if you don’t have the disposable income. It will stop you turning to credit to fix an issue (which will cost you even more in the long run!)
Ricky Willis is the original Skint Dad. A money-making enthusiast, father, and husband to Naomi. He is always looking for unique ways to earn a little extra.