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Step 3 (Scotland)Your priority debts

You’ve worked out your business and household income and outgoings (see Step 2). Now you need to work out which are the most important debts – the ones you need to start paying off first.

The rest of this section contains useful information about the following priority debts, including guidance on what to do and how much to pay.

Help with your priority debts

If you are unsure where to start, or need advice on your priority debts, you can webchat with one of our specialist advisers.

Our webchat service is available Monday to Friday, 9am to 8pm.

Checklist​

Use this simple checklist to make sure you take the right steps to deal with your priority debts.

Some debts are more important than others. These are called priority debts. It is important to use the money you have for your creditors to make agreements to settle these debts first. If you are not sure about how much to offer, contact us for advice.

  • Get some free, independent money advice: If you are reading this and haven’t yet spoken to a money adviser, contact us for advice about all your options.
  • Explain your situation to your creditors: Even if you haven’t decided how to deal with your priority debts, it’s a good idea to explain to your creditors that you are struggling. Tell them you are taking advice and doing a budget. This may get you some breathing space. Use our hold action sample letter.
  • Work out your budget:Your budget is very important as it will help you work out what you can afford to pay towards your priority debts.
  • Pay as much as you can: It is important that you pay as much as possible towards your priority debts. You will usually need to pay enough to cover your ongoing payments and offer a regular payment to reduce the arrears.
  • Has the creditor taken further action? Even if a creditor has said they will take further action, such as disconnecting your energy supply or repossessing your home, it is usually not too late to come to an arrangement and stop the action. Contact us for advice.
  • Can you increase your income? You may be entitled to benefits, tax credits or Universal Credit that you are not claiming, or there may be other ways of increasing your income.
  • Have you been treated unfairly? If you think you have been treated unfairly, you may have reason to complain. You may be able to complain to an ombudsman service, depending on what type of debt you are complaining about. You will usually have to complain to the creditor first. If you want more advice about who you can complain to, contact us for advice.

Priority business debts

Below we tell you what might happen if you delay sorting out different priority business debts.

  • ​Business mortgage: ​Repossess your business premises.
  • Second business mortgage or secured business overdrafts and loans​:Repossess your business premises (or repossess your home if the debt is secured on your home).
  • ​Business rent or lease arrears: Evict you from your business premises. Use bailiffs. You may also still have to pay the arrears, which could result in court action for a money judgment.
  • ​Business rates​: Use sheriff officers to try to take goods from outside or inside your business or home, bankruptcy. .
  • ​Business gas or electricity and water supplies: ​Cut off your supply.
  • ​Income tax, National Insurance and VAT arrears:​ Freeze your bank accounts, try to take goods from outside or inside your home or business, make deductions from your wages (if you are employed), or bankruptcy.
  • ​Business hire purchase, conditional sale or equipment leases: ​Repossess the goods or apply for a court order to make you hand them back.
  • ​Major suppliers: ​Loss of supplies which could make your business fail.
  • ​Some business overdrafts and loans: ​You may need to maintain your bank account in order to carry on trading. This will depend on the needs of your business.
  • Accountants​: They could take a 'lien' (where they keep your books). This means, for example, you cannot access your figures for tax returns.

The Debt Arrangement Scheme and priority debts

If some or all of your priority creditors have refused an offer of repayment (or if you think it is likely that some will), you should consider whether to apply for a debt payment programme under the Debt Arrangement Scheme (DAS). This will give you time to pay off your debts over a reasonable period and stop your creditors from taking action against you. You can exclude rent debt, secured loan debt and mortgage debt, if that is what you want to do. Any excluded debt will be noted in the debt payment programme application. Certain types of business, as well as individuals and couples, can use this scheme. The rules for a business DAS are different to those for an individual or a couple. All debts must be included. 

Summary warrants and priority debts

Some priority creditors can apply to the sheriff court for a summary warrant against you.  This is a court order that confirms how much money you owe. It is the first step in your creditor using diligence (where sheriff officers take enforcement action).  There is no need for a court hearing and the court must grant a summary warrant unless the creditor has not gone through the proper procedure (for example, they have not filled in the correct form). The summary warrant procedure may be used by priority creditors such as:

  • your local council, to collect overdue business rates and council tax; and
  • HMRC, to collect any income tax, National Insurance contributions or VAT, as well as overpayments of tax credits.

Creditors collecting ordinary credit debts cannot use a summary warrant.

Before your creditor can use most types of diligence, they need to send you a ‘charge for payment’. This is a formal demand asking you to pay what you owe, usually within 14 days.

Priority household debts

Below we tell you what might happen if you delay sorting out different priority household debts.

  • Mortgage or secured loans and overdrafts:​​ Repossess your home.
  • Rent: Evict you from your home. Use of bailiffs. You may also still have to pay arrears, which could result in court action for a money judgment.
  • ​Council tax and domestic water charge: ​ ​Deductions from some benefits, deductions from your wages (if you are employed), freezing your bank accounts, trying to take goods from inside or outside your home, or bankruptcy.
  • Gas or electricity: ​Cut off your supply.
  • ​Court fines: ​Deductions from some benefits, deductions from your wages (if you are employed), freezing your bank accounts, supervised attendance order, your vehicles could be taken, or you could be sent to prison.
  • ​Child maintenance: This will depend on whether you pay maintenance through the court or, through the Child Support Agency (CSA) or the Child Maintenance Service (CMS). In some cases, you could have your passport, ID card or driving licence taken away or, if you deliberately refuse to pay, risk going to prison.
  • ​Benefit overpayments: ​Deductions from most types of benefits, Universal Credit and, in some cases, deductions from your wages (if you are employed) and court action.
  • ​Tax-credit overpayments: ​Deductions from your ongoing tax credits, Universal Credit, or through your tax payments, or court action.
  • ​Hire purchase or conditional sale (for household items): ​Repossess the goods or a court order to make you hand them back.
  • ​TV licence​: Use bailiffs, deductions from your wages, deductions from some benefits, a clamping order, enforcement through the County Court or the High Court, or you could be sent to prison.

Priority business debts

Business mortgage

A lender’s powers are different depending on whether you take out a mortgage for your home or for business purposes, such as shop or office premises or a buy-to-let property.

Your mortgage lender may be more demanding if you took the mortgage out for business purposes.

If you are behind with your business mortgage repayments, you should contact your lender and discuss the options available. Use your Your budget to work out what you can afford to pay towards the debt.

If you cannot afford to pay your business mortgage, you will need to increase your income or you may have to consider selling the property.

For more information about business mortgages, contact us for advice.

Business rent

If you do not keep up your rent payments, your landlord can send a bailiff to your business premises to remove your stock and equipment without a court order.

Your landlord can also end your lease early if you have arrears. This is known as 'irritancy'. Check your lease to see if there are any irritancy terms and conditions.

Your landlord will have to give you a chance to pay the rent you owe first. The terms and conditions of your lease will tell you how long you will be given. Your landlord may have to tell other creditors that they intend to take your goods. This may lead to other creditors quickly taking action against you (known as diligence).

If you still have rent arrears, your landlord could also apply for a court order to evict you and then use diligence against your other assets.

Any action your landlord takes will depend on your relationship with them and the length of any lease you have. It is important to negotiate with your landlord as soon as you realise you are in financial difficulties. You can use Your budget to help you do this.

See our Diligence fact sheet and Commercial property leases fact sheet for more information. If you need more information about negotiating with your landlord, contact us for advice.

Business rates

The amount of business rates (sometimes called non-domestic rates) you have to pay for business premises is based on the rateable value, which is calculated during a valuation carried out by a Scottish Assessor.

Can I reduce my bill?

If you want to appeal against the rateable value, you should do this within six months of taking over the business premises.

It is a good idea to get professional advice from a specialist in this field if you are thinking about making an appeal. Phone your council’s valuation office for a list of reputable firms in your area and be very careful when dealing with firms who approach you first.

Types of relief

For the range of different reliefs available, see www.business.scotland.gov.uk.

It may be possible to claim a range of different reliefs to reduce the amount you have to pay for business rates. You may even be able to ask the local authority to grant up to 100% relief. You have to demonstrate that you would suffer severe hardship if you had to pay business rates and that it is in the interests of other ratepayers for them to grant relief. The local authority will usually only grant 100% relief if you supply an important service to the local community, and only in extreme circumstances.

If you stop trading, but are still responsible for your business lease, you may still have to pay business rates.

What happens if I don’t pay?

The council will usually tell you to pay your bill in 10 monthly instalments but they may also accept weekly payments. If at any time you find that you can’t pay the full monthly instalment, don’t just stop paying.

  • Keep paying what you can afford.
  • Contact the council and try to come to an arrangement. Use Your budget to help explain your situation.

If you don’t keep to any payment arrangement you make with the council, they may apply to the sheriff court for a ‘summary warrant’. This is the same process that is used to recover unpaid council tax.

Do not stop paying

You should not stop paying your business rates just because you feel that the valuation is wrong. You have to keep paying the set rate until the valuation is changed.

Further action against you by the council

Once the council have got a summary warrant, they may try to take further action against you. There are a number of ways the council can try to make you pay, such as taking goods from outside or inside your business or home, and freezing money in your bank account. This is called ‘diligence’. It is important that you understand your rights and the types of diligence that the council can use. See our Diligence fact sheet and Business rates fact sheet for more information.

Complaining

You may be able to complain to the Scottish Public Services Ombudsman if the council have not behaved properly or if they have not followed the proper procedure. You will need to complain to your local council first.

Business gas and electricity

Gas and electricity companies can cut off your supply in a few weeks if you don’t pay them, but they should only do this as a last resort. They must give you notice first.

How do I make a payment arrangement?

The energy supplier will usually want you to pay their bill before the next bill is due. You can ask to pay your bills every week, every two weeks or every month. If you have arrears, phone or write to the supplier and ask for a payment arrangement.

Use Your budget to support your offer of payment. This must cover the cost of the energy you are using and an amount to reduce the arrears. Even if the supplier does not agree to your offer, start paying what you have offered immediately. Do not offer to pay more than you can afford towards the arrears.

Ask if the supplier has a special department that deals with arrears and payment arrangements. If the first person you speak to is unhelpful, ask to speak to someone more senior.

What if I live at my business premises?

Your energy supplier may have to offer you a prepayment meter before disconnecting you if you live at your business premises. This depends on what type of contract you have with your energy supplier. You may pay more for your energy if you have a meter fitted but, once you have one, your supplier cannot disconnect you. Contact us for advice.

By law, your supplier must give you 7 days’ notice before they disconnect you. Contact Citizens Advice consumer helpline on 0808 223 1133 if you have been disconnected from your energy supply or threatened with disconnection, or your prepayment meter has stopped giving you energy.  If you are a pensioner, or you have long-term ill health, or you are disabled, you might get extra help to sort out your energy problems.

Complaints

If you complain to your energy supplier and you are not happy with their response, you can complain to the Ombudsman Services: Energy. They are an independent organisation that will investigate your complaint and make recommendations about how it should be sorted out.

Business water rates

Your business water company can, as a last resort, cut off your supply to your business premises if you do not pay your bills.

However, if you are in financial difficulty, ask to pay your bills weekly, fortnightly or monthly to suit your budgeting.

If you have arrears, you will normally be expected to pay them before your supplier sends your next bill. Use Your budget to make arrangements to pay the arrears.

For mixed-use premises (where you use part of the premises for business use and part for household use) remember to say which bill the payment is for, and be careful not to get payment books for different years mixed up. You should not be cut off if you have only one supply for mixed-use premises.

For business premises, your water company will write to give you a date when your water will be cut off. Contact the company immediately and start paying the amount on your current bill plus an amount you can afford off the arrears.

Even at this stage, you will usually be able to make an arrangement to pay off the arrears.

If, at this stage, your water company asks you to pay more than you can afford, contact us for advice.

Household water supply

You cannot be disconnected for water and sewerage charges, but this is a priority debt because you pay it along with your council tax and so the same enforcement rules apply.

Complaining

If you have a complaint about your water supply, contact your supplier first. If you are not happy with their reply, you may be able to take your complaint to the Scottish Public Services Ombudsman (SPSO). They can deal with complaints about most water suppliers.

Risk of eviction

In extreme cases, the environmental risk of your business being without water could lead you to being evicted, whether you own or rent your business premises.

Income tax

You must contact HMRC as soon as possible to arrange time to pay income tax arrears.

Make an offer to pay off the debt at a rate you can afford, and use Your budget to support your offer. Even if your offer is refused, start paying what you can afford, no matter how small the amount.

If you think your offer has been unfairly rejected, ask HMRC to review it under their complaints procedure.

If your tax return is late, HMRC will decide (‘determine’) how much you owe them. If your debt has been worked out in this way, you must send in your tax return as soon as possible. You should do this even if you think you may be too late. This may mean the debt is reduced and will also stop you being charged penalties for not sending in your tax return. You will be charged interest on any tax you are late paying.

HMRC can use a number of enforcement methods to recover an unpaid tax debt. These include the following.

Tax returns

HMRC will not accept an offer to pay arrears unless your returns are up to date. If you are having trouble putting in your tax return, for example, because you have lost your figures, or your accountant is holding on to your books because you have not paid their bill, contact us for advice.

Debt collection agencies

  • HMRC may pass your debt on to a debt collection agency. They are not bailiffs and have no rights to force entry to your business or home and take goods.
  • Use Your budget to make them an offer to pay by instalments based on what you can afford.

Summary warrant

  • HMRC can apply to the sheriff court for a summary warrant. If you do not pay the amount you owe in full, HMRC can take further action against you. This is called diligence.  To use most types of diligence, HMRC must send you a charge for payment giving you 14 days to pay the debt in full.
  • Diligence includes taking goods from outside your business or home. This is called attachment. HMRC can also apply to the court for a warrant to force entry into your business or home, but this is rare. HMRC can also take money from your bank account and take money from your wages if you are employed.

Sheriff court action

  • HMRC can apply to the sheriff court for a decree. If you do not make the payments the court has ordered, HMRC can take further action (diligence) against you.
  • HMRC can use the same types of diligence as if they had a summary warrant against you.

Bankruptcy

HMRC can apply to make you bankrupt if the debt is for £10,000 or more. This is more likely if you owe tax from a number of years, or if you agree a repayment offer and then do not pay. They will look at making you bankrupt even if you have no assets, and you will usually have to stop trading.

No time to pay

Unlike debts such as business rates or council tax, you cannot apply for time to pay when HMRC applies for a summary warrant or decree.

VAT

  • As with income tax, HMRC can take action to get a summary warrant or action to get a decree for unpaid VAT. The types of enforcement action (diligence) they can use are also the same as with income tax.
  • You will usually have to pay any VAT arrears in full before the next VAT return is due. Late payment penalties will be added to the bill from the time it becomes overdue.
  • The VAT officer will usually look at your past record of VAT payments before deciding what payments to
    accept. So start paying what you can afford immediately, no matter how small the amount.
  • If the arrears are based on an estimated assessment, you must send in an accurate return, which could reduce the bill. Even if you cannot pay, you may avoid a penalty for not making a VAT return.
  • If HMRC cannot recover the money you owe by taking away your goods, they will usually apply for a bankruptcy order.
  • HMRC can only make you bankrupt if you owe them £10,000 or more. It is important to let HMRC know if you stop trading, and you should apply to deregister for VAT if your turnover is less than the deregistration limit shown on our Tax information sheet . It is then often easier to come to an arrangement to pay off your VAT arrears by instalments. Contact us for advice.

National Insurance

There are four classes of National Insurance contributions (NICs).

  • Class 1 NICs are deducted from an employee’s wages and paid by the employer, along with income tax, under PAYE.
  • Class 2 NICs are paid at a flat weekly rate by self-employed people.
  • Class 3 NICs are voluntary contributions paid to help people qualify for retirement pension and certain benefits.
  • Class 4 NICs are paid by self-employed people on top of Class 2 NICs if earnings are above a certain threshold.

Class 1 and Class 4 NICs are collected by HMRC in the same way as income tax arrears. However, bailiff action can only take place at your business premises.

Class 2 NICs are collected by the National Insurance Contributions Office and, although they have the same powers as HMRC have for Class 1 and Class 4 NICs, their current policy seems to be to start proceedings through the sheriff court for a decree.

Business hire purchase or conditional sale.

You can buy goods on different types of credit agreements. With most credit, you own the goods straight away and only owe the money to the creditor. The creditor cannot ask you to return goods you bought with most types of credit. However, with hire purchase and conditional sale agreements, you do not own the goods until you have paid the last instalment. The most common type of goods bought on hire purchase agreements are cars.

What kind of agreement do you have?

If you have a hire purchase or conditional sale type of credit agreement, it should state this clearly. This information only covers hire purchase and conditional sale agreements which come under the Consumer Credit Act 1974. Your agreement will not come under the Consumer Credit Act if it was taken out by a limited company. If you are not sure what type of agreement you have, check your agreement or contact us for advice.

Can my lender take back the goods?

If you fall behind with your payments, the lender may be able to ask you to return the goods and then sell them to reduce the debt. You cannot sell the goods yourself without the lender’s permission.

Have you paid less than a third of the debt?

If you fall behind with payments, the lender may be able to repossess the goods. If you have paid less than a third of the debt, the lender may not need to get a court order before taking your goods back. 

You may be able to return the goods. See Returning the goods voluntarily below.

Have you paid off more than a third of the debt?

If you have paid off more than one third of the total owing, the creditor must go to court to ask you to return the goods. They cannot just come round and remove them.

Returning the goods voluntarily

You may be able to return the goods by writing to your lender to end your agreement. This is only possible if your lender has not already ended your agreement. You will owe up to half the agreement amount, any arrears and reasonable charges if the goods are damaged. If you have already paid half of the payments under the agreement, you will not usually be asked to pay anything more. Once you have returned the goods, you can treat any debt you still owe as a non-priority debt.

Keeping the goods

If it is important to you to keep the goods, you may want to treat this as a priority debt. If you do this, be prepared to explain to your creditors why you need the goods (for example, you need the car for your business or you live in a rural area with very limited transport).

If your lender will not agree to this, you may be able to apply to the sheriff court for a ‘time order’. If this is granted, you may be able to keep your goods and make smaller reduced payments to your lender. Contact us for advice.

What if my lender takes court action?

If your lender has taken court action, you may not have to return the goods as long as you agree to make the payments that the court decides. You can ask the court to allow you to pay less than your normal payments on the agreement if you can show that this is all you can afford to pay.

Get help

The law about hire purchase and conditional sale agreements is fairly complicated. If you are behind with payments on this type of agreement, contact us for advice.

See our Time orders fact sheet and Hire purchase debt fact sheet for more information.

Priority household debts​

Household mortgage

Mortgage arrears are very important because you could lose your home if you do not pay them. They must be treated as a priority debt.

Check all your loan agreements to see if they are ‘unsecured’ or ‘secured’ on your home. If they are secured loans, treat them as priority debts because lenders can go to court to repossess your home if you cannot pay your monthly instalments. They can then sell your property to pay off your debt.

Has your lender taken you to court?

You cannot be evicted from your home without a court order. You will not be evicted on the day of the hearing.

Before a lender can take court action to repossess your home, they should follow the steps set out in the pre-action protocol for mortgage possession claims. Lenders should consider all options before taking steps to repossess your home. Courts should take into account the pre-action protocol when deciding what order to make.

Dealing with mortgage or secured loan arrears

It’s never too early, or too late, to contact your lender. You may not be behind yet or your lender may have started court action. Whatever the situation, do not delay. Contact your lender as soon as possible by writing, phoning or making an appointment to see them. It is important that you pay as much as possible towards your mortgage or secured loan. If you have not paid anything for a while, you should start regularly paying what you can, even if you can’t afford the full monthly payment.

There may be benefits, tax credits or Universal Credit that you are not claiming or other ways of increasing your income. If you receive certain benefits, you can get help from the Department of Work and Pensions (DWP) with some of the interest payments on your mortgage. This is a secured loan and not a benefit. Check if you have any mortgage payment protection insurance that you can claim. See our Help with mortgage payments fact sheet for more information.

Have you been treated fairly?

If you think you have been treated unfairly, you may have reason to complain. You can complain to the Financial Ombudsman Service but you must complain to your lender first.

Visit our Homelessness advice fact sheet and Mortgage arrears fact sheet for more information.

​Rent

It is very important that you do not build up rent arrears on your home because you could lose it if you do not pay them off.

Your right to stay in your home depends on the type of tenancy you have. Each type gives different rights. So it's important for you to find out what type of tenancy you have. If you are not sure, contact Shelter or your local Citizens Advice office. Contact us for​ more advice.

You cannot be evicted from your home without a court or tribunal order. Even if yo​u are taken to court or tribunal, this does not always mean you will automatically lose your home. Keep paying your rent and make an offer to pay off the arrears. Even if the court or tribunal decides you cannot afford to stay there, you will not be evicted from your home on the day of the hearing. There are special rules for some types of tenancy.

Before a social landlord (such as a local council or a housing association) can take court action to evict you from your home, they should follow the Scottish Government's pre-action requirements. Courts should take these requirements into account before deciding what order to make.

Rent arrears fact sheets

For more information about how to deal with rent arrears, see our Rent arrears for social housing tenants fact sheet or Rent arrears for private tenants fact sheet.

These fact sheets will give you practical information and advice if you are behind on your rent. They will explain your options, and the processes your landlord must follow.

Use these fact sheets to:

  • work out what kind of tenancy you have;
  • find out if there is any help you can get with your rent;
  • help you negotiate with your landlord; and
  • get advice about dealing with court or tribunal action.

These fact sheets also include some useful contacts and links for you to get further help.

Dealing with rent arrears

It is never too early or too late to come to an arrangement to repay your arrears. You may not be behind yet or your landlord may have started court or tribunal action. Whatever the situation, don't delay. Contact your landlord as soon as possible by writing to them, phoning them or making an appointment to see them.

Make sure your rent arrears have been worked out properly. Get a breakdown of your rent account from your landlord. Check that all the payments you have made have been added to your account. Ask for regular statements. Keep your receipts.

If you have made an offer to pay the arrears, start paying this as soon as possible, even if it hasn't been accepted by your landlord. You also need to pay your normal rent. If you haven't paid for a while, pay as much as you can.

There may be benefits, tax credits or Universal Credit that you are not claiming or other ways of increasing your income. You may be able to claim Housing Benefit to reduce the rent you pay. Ask your council's Housing Benefit office for a form. If you are claiming Universal Credit, make sure that you put in the amount of your rent when you make a claim. Pay as much as you can towards your rent until your benefit comes through. You might want to get a short-term benefit advance of Housing Benefit or a short-term advance of Universal Credit to help you manage your rent payments.

No eviction without a court or tribunal order

You cannot be evicted for rent arrears without a court or tribunal order. However, if you have a common law tenancy (for example, you are a boarder, live in a hostel or are a hotel guest) or are a squatter, you do not have the same rights as a tenant.

Harassment

If your landlord threatens to throw you out without going to court or tribunal, or harasses you to make you leave, they will be acting illegally. If this is happening to you, contact your local council. Ask for the person who deals with tenants who are being harassed. Contact us for advice.

Have you been treated fairly?

If you think you have been treated unfairly, complain to your landlord. If you are still not happy, and you are a council or housing-association tenant, you can complain to the Scottish Public Services Ombudsman. If you are a private tenant, contact Shelter Scotland to help you look at your options before you make a complaint.

Private tenancies

It is very important to check exactly what sort of tenancy agreement you have. It can be a lot easier for a landlord to evict you from your home if you have a private residential tenancy.

In some cases, the tribunal can choose whether it is reasonable to make you leave your home. In other cases, the tribunal must order you to leave.

Assured and short assured tenancies

If your landlord goes to tribunal and you still have at least three months' worth of rent arrears on the date of the hearing, the tribunal cannot allow you to make an arrangement to pay the arrears and it has to let your landlord evict you.

If you have a short assured tenancy, your landlord can ask you to leave at the end of the tenancy term as long as they follow the correct procedures. Contact us for advice.

Private residential tenancy

If your landlord goes to tribunal and you have had rent arrears for three months or more in a row, and you owe a month's worth of rent on the day of the hearing, the tribunal cannot allow you to make an arrangement to pay the arrears and it has to let your landlord evict you. Contact us for advice.

Household water and sewerage charge

Your local council will usually collect your water charges with your council tax bill, and pass the money on to Scottish Water. The charges will be listed on your council tax bill. Any debts for water and council tax are treated as one single debt. Arrears are collected and enforcement action.

Disconnection and enforcement action

You cannot be disconnected for water and sewerage charges, but this is a priority debt because you pay it along with your council tax and the same enforcement rules apply.

Water meters 

If you pay for your water direct to Scottish Water because you have a water meter, you will not have to pay for water through your council tax bill. Scottish Water cannot disconnect your water supply. If you do not pay, they can collect the arrears by taking action in the sheriff court in the same way as for credit debts.

The Scottish Public Services Ombudsman (SPSO)

If you have a complaint about your water supply, contact your supplier first. If you are not happy with their reply, you may be able to take your complaint to the SPSO. They can deal with complaints about most water suppliers.

Council tax

The amount of council tax you pay is based on:

  • the value of your home (homes are placed in a band – A to H);
  • the number of adults who live in your home and their status; and
  • the amount of Council Tax Reduction that you get from your local council.

Who pays what?

  • Only people over 18 can be made to pay the bill. If there is more than one person over 18 living in your home, the owner will normally have to pay the bill if they live in the home. Joint tenants and owners may have to pay, even if their names are not on the bill. If you are either married, living with your partner, or living together in a same-sex civil partnership, both you and your partner will be responsible for paying the bill.
  • Sometimes the owner of a property will be responsible for the bill even if they don’t live there, for example, if a property is unoccupied. If you are not sure who is responsible for the bill, contact us for advice.

Can I reduce my bill?

You may get a reduction if someone living in the house has a disability. Apply to the council for this. Only some properties will qualify. Contact a local welfare rights agency or contact us for advice.

You will also get a discount in the following circumstances.

  • If you are the only adult in the house.
  • Or, if you share your house only with people who are not taken into account, such as:
  • a full-time student or student nurse;
  • an apprentice or someone on a youth-training scheme (only certain ones apply); or
  • someone with a mental disability who is getting certain disability benefits.

Tell the council if you think you may qualify for a discount. Check how this works with your local council.

You may be able to claim a rebate called ‘Second Adult Rebate’. Check how this works with your local council.

Scottish Government support for council tax

From April 2013, the way that you can get help with your council tax has changed. Ask your local council how this works.

You may be able to claim a rebate called 'Second Adult Rebate'. Ask your local council how this works.

What happens if I don’t pay?

The council will usually tell you to pay your bill in 10 monthly instalments but they may accept weekly payments. If you find that you can’t pay the full monthly instalment, don’t just stop paying.

  • If your circumstances have changed, you may now qualify for help with paying your council tax bill from your local council. Contact us for advice.
  • Keep paying what you can afford.
  • Contact the council and try to come to an arrangement. Use Your budget to help explain your situation.

If you don’t keep to any payment arrangement you make with the council, they may apply to the sheriff court to make a ‘summary warrant’ for the full amount they say you owe. The court will also add a charge equal to 10% of the amount you owe. The order will state that you are due to pay your council tax and have not done so.

Further action against you by the council

Once the council have got a summary warrant, they may try to take further action against you. There are a number of ways the council can try to make you pay, such as freezing money in your bank account or taking regular deductions from your wages if you are employed. This is called ‘diligence’. It is important that you understand your rights and the types of diligence that the council can use.

Complaining

You may be able to complain to the Scottish Public Services Ombudsman if the council have not behaved properly or not followed the proper procedure. You will need to complain to your local council first.

See our Council tax arrears fact sheet and Diligence fact sheet for more information.

Household gas and electricity

Gas and electricity companies can cut off your supply in a few weeks if you don’t pay them, but they should only do this as a last resort. They must give you notice first. They cannot cut off your supply unless they have first offered you a range of payment methods to help you pay. It is important to contact them as soon as you know you are going to have problems. You should treat gas and electricity bills as a priority debt.

How do I make an arrangement?

The energy supplier will usually want their bill paid before the next bill is due. You can ask to pay your bills every week, every two weeks, or every month. If you have arrears, contact the supplier and ask for a payment arrangement.

Use Your budget to support your offer of payment. This must cover the cost of the energy you are using and an amount off the arrears. Even if the supplier does not agree to your offer, start paying what you have offered immediately. Do not offer to pay more than you can afford towards the arrears. All energy suppliers should agree, under their standard licence conditions, to accept an offer of repayment in instalments at a rate that you can afford.

If the first person you speak to is unhelpful, ask to speak to someone more senior.

Ask the supplier for a copy of their code of practice. This explains your rights and how to make a payment arrangement.

Most energy suppliers will not disconnect you if:

  • you agree to a payment arrangement;
  • you agree to have a pre-payment meter installed;
  • the debt belongs to a person who lived in your home before you; or
  • it is between October and March and all the adults in the household are over retirement age.

Under the Energy UK Vulnerability Commitment, member companies will not knowingly disconnect you if:

  • you are vulnerable;
  • your household has children under the age of 6 (or under the age of 16 during 1 October to 31 March); or
  • you cannot safeguard your personal welfare or the personal welfare of other members of the household due to age, health, disability or severe financial insecurity.

Prepayment meters

If it is safe to install a prepayment meter, your supplier must ask you if you want one before your supply is cut off. If you have not fallen behind on an arrears repayment arrangement, the energy supplier cannot insist that you have a prepayment meter installed. But you can still ask for a prepayment meter if you want one.

Ofgem guidelines

Ofgem is the regulatory organisation for gas and electricity. Energy suppliers must keep to Ofgem's guidelines, which say they should take your circumstances into account when making an arrangement to pay.

The supplier still wants to cut my fuel off

If you are threatened with being cut off, contact the social services department of your local council or the Department of Work and Pensions (DWP) for help. The fuel supplier will delay cutting you off if they are told the social services or DWP are looking into your case. They will usually hold action for 10 working days but may agree to delay longer. This could give you time to make an arrangement to pay. The Children’s (Scotland) Act 1995 gives social services the power to make payments in certain circumstances to families with children.

You should contact the Citizens Advice consumer helpline if you are threatened with being cut off or have been disconnected.

If you already have a prepayment meter

If you can’t afford to top up your prepayment meter and are at risk of running out of credit or have already done so, contact your supplier. Explain your situation and ask for extra credit to keep you going. Under their licence conditions, your supplier is required to provide emergency credit if you are unable to top up your prepayment meter.

If you are vulnerable, your supplier may also offer you further credit if they become aware you are self-rationing or have self-rationed. This is where you limit your energy usage or you reduce spending on other goods or services so that you keep can your supply on. Contact your supplier if you need this support.

Help to pay your bill

Some fuel companies have set up trust funds that may be able to help you pay your fuel bills if you are in financial difficulties. Get information about trust funds and support schemes you can apply to for financial help by going to the Auriga Services website www.aurigaservices.co.uk. Click on the link to the Help with Water & Energy booklet at the top of the page. If your supplier does not have a trust fund, you can apply to the British Gas Energy Trust for help, even if you are not a consumer of British Gas. Also, the Home Energy Efficiency Programmes for Scotland help people to make sure they are getting all the income they are entitled to, reduce energy bills if possible and improve the energy efficiency of their homes. The type of help you are entitled to depends on your circumstances.

Complaining about your energy supplier

All suppliers should follow a code of practice when dealing with people in arrears. You can complain to Ombudsman Services: Energy about a billing or transfer problem but you must complain to your supplier first.

TV licence

You will need a TV licence unless you are 75 years or older and you, or your partner living at the same address, receive Pension Credit.

TV licence arrears are a priority payment because you can be fined in the Sheriff court if you do not have a licence. In Your budget, put these payments under household outgoings.

If you are being threatened with prosecution, ask TV Licensing about the Simple Payment Plan. If TV Licensing agree to set up a Simple Payment Plan and you keep to the payments, it could stop any further action being taken.

If you are contacted by TV Licensing, or are being prosecuted for not having a licence, it is a good idea to buy a licence as soon as possible. You should send a copy of the licence to the court to help your case. It is also a good idea to plead guilty to not having a licence and explain the reasons why (even if this is just that you simply forgot). ​Even if you have to pay a fine for not having a licence, you still need to buy a licence as well. You may already have a fine for not paying your TV licence.

Court fines

Fines are the most common penalty used by the Scottish criminal courts. A sheriff or justice of the peace may order you to pay a fine, for example, for a road-traffic offence, for not having a TV licence or for another offence such as theft, minor assault or breach of the peace.

Golden rules

  • If you have a court hearing, or have arrears from failing to pay fines, contact us for advice.
  • Always go to court hearings.
  • Take your budget with you.
  • Try to make arrangements that you can afford to pay or contact the court if you cannot pay.
  • Keep paying what you can afford.

See our Fines in the sheriff and justice of the peace courts fact sheet for more information.

Parking penalty charges

Some local councils have made parking offences non-criminal offences and enforce parking penalty charges through a civil sheriff court procedure instead of through the criminal courts. There are special rules that apply if you have this type of parking penalty. You cannot be sent to prison but the local council can use diligence against you to try to recover the money. If you have a parking penalty charge, contact us for advice.

Which type of parking penalty do I have?

It is important that you know the type of parking penalty you have because the rules about what happens if you don’t pay are different. You should check whether you have a penalty charge notice from the local council or a fixed penalty from the police. The rules are also different if you parked on private land. If you are unsure, contact us for advice.

Child maintenance

You can be ordered to pay maintenance either by the court, as part of the separation or divorce process, or by the Child Support Agency (CSA) or the Child Maintenance Service (CMS)

The Child Maintenance Service

The CSA scheme is changing. Most child maintenance cases are now dealt with by the Child Maintenance Service. This is gradually replacing the CSA. This means some of the rules will be different when you apply for maintenance and there may be extra powers to make you pay. Contact us for advice.

Maintenance through the court

If the court has ordered you to make regular payments, you can apply to reduce the payments if you cannot afford them.

If you do not pay, the court can order you to go to a hearing to explain why you have not paid.

If the court decides that you are deliberately not paying, it may try to use diligence against you. In some situations, you could even be sent to prison.

Maintenance through the Child Support Agency or the Child Maintenance Service

If you have a child or children who do not live with you, the CSA may ask you to pay child maintenance. The CSA will decide the amount you have to pay by using a set formula. If you do not pay, the CSA can collect it directly from your wages, or from benefits without a court order.

The CSA can apply for a deduction order to take payments out of your bank account. This can be for regular payments or for a lump sum, but there are rules about how much money the CSA is allowed to take out of your account.

If they cannot do any of these things, the CSA can ask the sheriff court for a ‘liability order’. If they do this, they may try to take further action. Contact us for advice.

Benefit overpayments

You may be told by the Department of Work and Pensions (DWP) that you have been overpaid a benefit, such as Income Support, and that they want you to pay this back. The DWP must tell you if the overpayment can be recovered from you and why. If you do not agree that you owe the money, you can appeal. The law on overpayments is complicated, so before deciding whether to appeal, contact your local advice centre or contact us for advice.

The DWP can make deductions from most types of benefits to collect overpayments. There are maximum weekly amounts that can be taken. If this will cause you hardship, contact the DWP and ask them to take less. Use Your budget and explain why the payments will cause you hardship.

In some circumstances, the DWP will agree to ‘write-off’ the overpayment if your repayments are causing you hardship. Ask your local MSP to help.

If you are not on any benefits, you can treat the overpayment as a non-priority debt.

The DWP could take action against you in the sheriff court to get their money back, but there are steps you can take to deal with this. If the DWP threatens to take court action against you, or if you receive any court papers, contact us for advice.

Special rules for Housing Benefit and Council Tax Benefit

If your council says you have been overpaid Housing Benefit or Council Tax Benefit, special rules apply. Different rules may also apply if the council say they have overpaid you as part of the Council Tax Reduction scheme. Contact us for advice.

Tax-credit overpayments

In some circumstances, you may be told that you have been overpaid Child Tax Credit or Working Tax Credit. If you do not agree that you have been overpaid, or that the amount is correct, you may be able to appeal. Contact us for advice.

Overpayments can be recovered in different ways, including deductions from your ongoing tax credits claim or your Universal Credit claim, by reducing your tax code or even through the same enforcement methods as a tax debt. In some cases, you can also agree in writing for deductions to be made from your benefits.

HMRC may agree not to recover the overpayment if it is caused by a mistake by them and you have followed the rules for reporting any mistakes you spot and changes in your circumstances. Contact us for advice if you are in this situation.

I cannot afford the repayment

If paying the tax credits back will cause you hardship, you may be able to reduce the rate at which you pay it back. You should speak to HMRC and ask for time to pay it back at a rate you can afford. See their code of practice What happens if we have paid you too much tax credits?. In cases of extreme hardship, or if there is evidence of mental-health problems, they can consider writing off all or part of the debt.

Household hire purchase or conditional sale

The rules for dealing with hire purchase and conditional sale are usually the same whether they are a business or household priority debt.

Next steps

You are now at the end of step 3. If you have priority debts, hopefully this section has helped you work out how to deal with them. Make sure you update your budget with any payments you have agreed to make to your priority creditors.

Step 4 is the last step and it’s called Dealing with your non-priority debts. This step will explain which debts are non-priority, the powers your creditors have to make you pay and your options for dealing with your debts.

You will need the information from Your budget to help you decide which option is right for you.