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Christmas Borrowing: Why It Puts Your Council Tax at Risk

Updated for 2026

Christmas borrowing might seem like a quick fix when December rolls around, but taking on debt to fund the festive season can leave you struggling well into the new year. With the cost of living still putting pressure on household budgets across the UK, borrowing to cover presents, food and decorations is a risk that millions of families face every winter. If you are already behind on bills or council tax, adding more debt to the pile only makes things harder.

Why Christmas Borrowing Is on the Rise

Research from MoneyHelper (formerly the Money Advice Service) shows that UK households now spend an average of over \u00a31,100 each Christmas. For families already dealing with tight finances, that figure is daunting. Credit cards, buy now pay later schemes and short-term loans have made it easier than ever to spend beyond your means during December.

In 2025, the Financial Conduct Authority reported that over 3.6 million people in the UK used high-cost credit over the Christmas period. Many of those borrowers were already in some form of financial difficulty before they took on extra debt. The pattern repeats itself every year: spend in December, struggle in January, and fall further behind on priority bills like council tax.

The Real Cost of Christmas Borrowing

Short-term borrowing might cover the cost of a few extra gifts, but the interest charges and repayment terms can turn a small loan into a much bigger problem. Payday loans, for example, still carry annual percentage rates that can exceed 1,000%. Even credit cards with 0% introductory offers become expensive if you cannot clear the balance before the promotional period ends.

If you are already behind on council tax payments, taking on Christmas debt pushes you further from a manageable position. Councils can apply for a liability order, pass your debt to enforcement agents (bailiffs), or even apply for an attachment of earnings. These are serious consequences that a few extra presents simply are not worth.

It is also worth knowing that council tax is classified as a priority debt. That means it should always be paid before credit cards, personal loans or store cards. If Christmas borrowing causes you to miss council tax instalments, you could face enforcement action while still paying off festive spending.

Alternatives to Borrowing at Christmas

There are practical steps you can take to avoid falling into the Christmas borrowing trap:

  • Set a realistic budget in October or November and stick to it
  • Use savings rather than credit wherever possible
  • Suggest a Secret Santa arrangement with family or friends to reduce the number of gifts
  • Take advantage of sales and cashback offers throughout the year
  • Consider homemade gifts or experience-based presents that cost less

If you have already borrowed and are finding it difficult to keep up with repayments, do not ignore the problem. Early action gives you more options. You can read our guide on spreading the cost of Christmas for more budget-friendly ideas.

How Christmas Debt Affects Your Council Tax

When money is tight in January, council tax is often the first bill that gets pushed aside. Unlike a credit card company, your local council will not send you gentle reminders for months on end. The collection process moves quickly: a missed payment triggers a reminder, then a final notice, and then a court summons. Once a liability order is granted, the council has the power to instruct bailiffs, deduct money from your wages, or even begin bankruptcy proceedings in extreme cases.

According to GOV.UK, councils collected over \u00a339 billion in council tax during 2024/25. Despite that figure, arrears continue to climb year on year. A significant portion of those arrears build up between January and March, exactly when families are recovering from Christmas spending.

Getting Help With Christmas Borrowing Debt

If you have borrowed over Christmas and are now struggling to meet your regular outgoings, you have options. Free debt advice is available from several organisations across the UK, including StepChange, Citizens Advice, and National Debtline.

At Council Tax Advisors, we specialise in helping people who have fallen behind on council tax. We can negotiate with your council on your behalf to arrange affordable repayment plans that take your full financial situation into account. Our service is free, impartial, and designed to take the pressure off so you can focus on getting back on track.

You might also benefit from reading our guide on payday loan alternatives if you are considering borrowing again.

Christmas Should Not Cost Your Financial Stability

The festive season is meant to be enjoyable, not a source of stress that lasts for months. If you are tempted to borrow this Christmas, take a step back and consider whether the short-term benefit is worth the long-term cost. And if you have already borrowed and things have spiralled, do not wait until enforcement action begins. Getting advice early is always the better option.

This article is for general information only and does not constitute financial advice. If you need help with council tax debt or other financial difficulties, please contact a qualified adviser.

Need Help With Council Tax Debt?

If Christmas borrowing has left you behind on council tax, we can help. Get free, confidential advice and find out your options today.

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