Almost five per cent of households in Ceredigion are not paying council tax amid huge rises in the past five years, blowing a huge hole in the county council’s budget that it hopes second home premiums will fill.

Historically, council tax collection rates in Ceredigion have been extremely high, with a 99.8 per cent collection rate recorded in 2017/18.

According to a Ceredigion County Council report put before Cabinet members on 2 September, the rate fell steadily over the next five years to 99.3 per cent.

Since then, the rate has fallen to 96.4 per cent in 2024/25 and in year has dipped a further 1.25 per cent, the report outlines.

That means nearly five per cent of households are currently unable or refusing to pay council tax amid huge rises in the past five years.

Earlier this year, a 9.3 per cent rise was approved, with some councillors opposing the move warning that families in the county “are at breaking point.”

That rise followed huge hikes in previous years, including 11.1 per cent in 2024/25 and a 7.3 per cent rise in 2023/24.

If the current position of the council tax collection rate holds, the report says, it would leave a shortfall in the budget of around £900,000.

That shortfall, the report outlines, has been partially filled by a bigger than expected gain from the premiums on long-term empty and second homes in the county.

Raised to 150 per cent from April after a year at 100 per cent, the premiums were designed to free housing stock for local residents.

While there has been a “reasonably significant decrease” in the number of long term empty properties, there “has only been a small decrease in the number of second homes to date,” the report says.

As of July this year, there were still 1,632 second homes in the county, down just 16 from the 1,648 recorded in October 2023, despite the introduction of the council tax premiums.

The council report says: “If the in-year position does not improve by year-end it could in theory equate to a shortfall of £900,000, however this would not crystallise immediately as debt recovery actions would still continue in future periods after year-end.

“Behavioural change was expected as a result of the increased levels of Council Tax Premium as the over-riding policy intention was to bring properties back into permanently occupied residential use.

“However, the current trends are still not showing the overall level of decrease that had been assumed when setting the Budget.

“It is therefore highly likely that there will continue to be a temporary financial benefit until the policy approach starts achieving its intentions.

“This has the potential to be financially significant (indicatively £450,000 to 30/06/25 for the year to date.

“Therefore the lower Council Tax collection rate is being offset by the higher volume of properties subject to a Council Tax Premium.”