IPA Amounts and Council Tax

KJ2886 · 22 November 2017 at 12:02AM

I had an IPA requested for around £180 Per month, asked them to look at it again as thought it was too high, came back at still £163.48 or something (Very precise amount?!) and said get back in touch in april once Im back paying council tax and it will be adjusted to a lower figure or even zero
(wasnt in arrears with council tax or anything but it was added to my bankruptcy)
If the amount in april goes to £0 in april once im paying council tax, am I still subject to the 36 month IPA if my income changes after discharge (Not till july next year so looking far ahead)

Thanks

tigerfeet2006 · 22 November 2017 at 10:32PM

There are 3 types of IPA's. A Nil Tax Code IPA which is when your tax that you would pay to the tax bods is paid to the IS via an intermediary. This will last until the end of the tax year or if you change your job.

The Council Tax IPA where the money that you would have paid to the Council is paid to the IS through an intermediary. This will stop at the start of the new council tax year and you will then start to pay the council again.

The Excess Income IPA is paid for 36 months from the time of inception and is where you pay any excess income to the intermediary. This can be varied if your circumstances change either up, down or suspended.

KJ2886 · 22 November 2017 at 10:52PM

Oh im not sure what my one is then! My council tax amount was around £92/93 p/m and been asked for £163.something for an IPA, I thought as it was a precise figure they gave (with pence) it might be what I would have paid council tax from date of bankruptcy (july) to end of tax year!
I don't earn enough to pay Tax so wont be that one, part time earnings (£450 4/weekly ish), DLA and Working Tax Credits so looks like its excess income or Council tax one then

National_Debtline · 23 November 2017 at 5:23PM

Hi KJ2886

The current year of council tax is always included in your bankruptcy, even if you were not in arrears. That can mean you can initially afford an IPA but it stops when you have to start paying council tax again.

If your IPA ends because you cannot afford it and you are then discharged, an IPA cannot be started again if your income then increases. You do not have to declare any change in income if you have been discharged and there was no IPA in place at that point.

Susie
@natdebtline

Butts · 23 November 2017 at 5:47PM

National_Debtline wrote: »

Hi KJ2886

The current year of council tax is always included in your bankruptcy, even if you were not in arrears. That can mean you can initially afford an IPA but it stops when you have to start paying council tax again.

If your IPA ends because you cannot afford it and you are then discharged, an IPA cannot be started again if your income then increases. You do not have to declare any change in income if you have been discharged and there was no IPA in place at that point.

Susie
@natdebtline

Are you sure about that ?

My Council Tax (up to date at the time of Bankruptcy last Month) has not been included in my Bankruptcy and I am continuing to pay it to the Council.

Also I have an NT Tax Code and am not paying an IPA for that either. I only pay (or did pay) a small amount of Tax each month.

The rules on these Council Tax IPA's really need to be clarified in detail - ie in what circumstances you carry on paying the Council and when you don't.

KJ2886 · 23 November 2017 at 7:07PM

National_Debtline wrote: »

Hi KJ2886

The current year of council tax is always included in your bankruptcy, even if you were not in arrears. That can mean you can initially afford an IPA but it stops when you have to start paying council tax again.

If your IPA ends because you cannot afford it and you are then discharged, an IPA cannot be started again if your income then increases. You do not have to declare any change in income if you have been discharged and there was no IPA in place at that point.

Susie
@natdebtline

Thank you, I wasnt sure about that, I just thought that once an IPA has been agreed/signed then I would have to tell them about income changes for the full 36 months even if it was stopped after i resume paying council tax etc

debt_doctor · 23 November 2017 at 7:40PM

Hi,

I agree that the current years council tax is always a bankruptcy debt, whether in arrears or not.
What I do not agree with is what has been said about the IPA being created due to you having surplus funds from not paying the council tax.
There is no such thing as a 'council tax IPA'. You have been given an IPA because you have surplus income (it doesn't matter why) and in my view you have indeed begun a 36 month cycle where by the IPA may well fall to zero in April but continue to run in the background for the remainder of 36 months.
In my view you do have a duty to provide income information for the 36 month period.
I would be happy (very happy!) to see any evidence that says otherwise.
DD

KJ2886 · 23 November 2017 at 8:22PM

But then most people should have an IPA then shouldnt they? if their council tax was added to the bankruptcy, whatever they would have paid to the council would now be excess and create an IPA?

It would have been better if it wasnt added to bankruptcy, pay to the council and then wouldnt have anything left for an IPA

debt_doctor · 23 November 2017 at 8:38PM

Yes, that is largely correct. I find this issue of current year council tax more of a nuisance to a bankrupt rather than a benefit.
When I am looking at a potential IPA for a client in this circumstance I include every allowance that I can to provide a negative budget of at least the council tax figure.
Some escape the problem - those with a partner who is joint & severally liable for the council tax as the payment still remains part of the household budget, just the partners not the bankrupts. Someone who lives with parents has no liability anyway so not affected.
I would also say that across the country, ORs do not uniformly take this council tax rule in to account, which leads to more confusion.
DD

KJ2886 · 23 November 2017 at 8:55PM

My income was made up of Wages £520/ DLA £345/ WTC £403 monthly amounts so didnt know what to expect IPA with mainly benefits too and as i live alone I put what I thought was good amounts for my expenditure, it was just hard to know what to put as costs relating to my DLA/Care
I got the original IPA of £180 and then down to still £163, wish I had the energy to question it more but couldnt deal with the stress as not been well so signed it this week!
I dont think my income will change but its just knowing its 36 months and the what if's

fatbelly · 23 November 2017 at 8:57PM

debt_doctor wrote: »

Hi,

I agree that the current years council tax is always a bankruptcy debt, whether in arrears or not.
What I do not agree with is what has been said about the IPA being created due to you having surplus funds from not paying the council tax.
There is no such thing as a 'council tax IPA'. You have been given an IPA because you have surplus income (it doesn't matter why) and in my view you have indeed begun a 36 month cycle where by the IPA may well fall to zero in April but continue to run in the background for the remainder of 36 months.
In my view you do have a duty to provide income information for the 36 month period.
I would be happy (very happy!) to see any evidence that says otherwise.
DD

That's my understanding too. An IPA is set up for a fixed period, usually 36 months, but can be varied, more than once if necessary, and could be set to zero for some of that period.

IPA Amounts and Council Tax

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