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Can your Council Tax holiday help pay for your summer holiday?

Many Brits will be surprised to realise they’re going to have some extra cash for the next two months.

Unless you’ve contacted your local council and asked to pay your Council Tax over 12 months, you’ll find you’ve got what’s called a “Council Tax holiday” in February and March.

The standard way to pay Council Tax is to split a full year’s worth over ten months, and few people change this, which means they don’t pay anything for the last two months of the financial year.  So many will find their bank balances appear to be a little healthier than normal.

The question is what do you do with it? It really depends on your financial situation, but we’ve three scenarios to help you decide what’s best for you.

Pay off loans and credit cards

If you have loans or owe money on credit cards it usually makes sense to pay off the debt that charges the highest rate of interest first – it’s the fastest way to clear your debts. 

If you don’t have debts, you could consider overpaying your mortgage.


Start an emergency fund

A good rule of thumb is to have a minimum of three months of money available should you need it. So if it costs you £1000 to cover rent, bills, travel, food and other essentials each month, you’ll need a pot of £3,000.

That could be to protect against losing your job, or to cover unexpected costs like repairs to your home or car.

The money from your Council Tax holiday will only be the start, but putting aside just £3 every day would leave you with an extra £1,095 after 12 months.

Put it towards a holiday or other savings goal

If you feel you’re in a good place with debts and an emergency fund, then it can be a decent chunk towards a savings goal. If you physically move the cash to a different account, you won’t accidentally eat into it with day to day spending.

You can keep the momentum going on this fund by setting up a standing order to transfer cash from your main account to this savings account.

What will you do with the money? Have you already made plans for the cash? Let us know below.

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  • elaine / 9 March 2015

    I I go about my day to day spending...

  • elaine / 9 March 2015

    I thought this was a great idea to strive for. Not able to put away £3 per day yet, but it's good to have a savings goal and to see how long it takes (a full year) to get a grand together. I will also see if there are ways that I can save £3 during each day too.

  • Janet / 9 March 2015

    I don't consider it as extra cash as I use it towards the water rates which are due at this time of year

  • Chausiku / 9 March 2015

    I find your tips invaluable.... Thank you!

  • Fair / 8 March 2015

    I do not think this should be called a Council Tax' holiday' - that makes it sound like we are getting something for free when we are not. Legislation dictates the policy on the number of installments that we pay the tax over , it is not a holiday from paying.
    But a more serious banner would be 'second home owners to pay 100% Council Tax all year round reducing your Council Tax bill - what extra services could be provided for the extra money'

  • Labour voter / 8 March 2015

    On low income how on earth do we put away £3 per day? Very patronising! That's all lots of people have to live on! Get real!

  • Juliette Brown / 8 March 2015

    Thank you for your advice about putting away a little amount of money each day. Yes I am on a very low income, I don't receive JSA. I applied 3 times but no joy. I don't get working tax credit either, due to only working 5 hours a week. I do however receive Council tax and housing benefit, which I am great full for. Stretching what money i have between me and my 2 teenage boys does not leave us with enough to have the heating on. But if I can put away as little as £3 a week, that could help to buy new stair carpets, the old ones are now 20 years old.

  • Ana Irena / 8 March 2015

    It seems the modern version of saving money by putting it in the traditional pig box.

  • Wendy Hayter / 8 March 2015


  • Rosie / 8 March 2015

    Every year I spend the 2 month council tax break money on foreign currency for our holiday.