Most people paying off arrears picture the money coming off the newest bill, because that is the one arriving through the letterbox. Councils generally work the other way round.

The default is not a trick, and it stops the oldest debt sitting untouched forever. It can still quietly sink a payment arrangement, which is why how to set up a council tax payment arrangement is worth reading alongside this.

There is no statutory rule setting the order. The Council Tax (Administration and Enforcement) (Scotland) Regulations 1992 say nothing about how a payment is applied between years, so it is council policy rather than law.

The finding, and how it was established

The Council Tax (Administration and Enforcement) (Scotland) Regulations 1992 were read from regulation 1 to regulation 31, together with both Schedules. Part V, which is the billing part, contains no provision of appropriation or allocation at all.

Regulation 24 deals with lump sum payments and regulation 25 with non-cash payments. Neither says anything about which year a payment is credited to.

The one asymmetry worth knowing about

Statute does tell a council what to do with money it owes you. Regulations 23(3) and 27(4), and Schedule 1 paragraphs 5(4) and 6(7), each make an overpayment available for repayment only to the extent that it exceeds any other outstanding council tax liability of yours to that authority.

So a credit is set against arrears by law, and a payment is allocated by policy. That is the whole legal shape of this question.

What the regulations do and do not cover

A currency warning that applies to every page on this subject

legislation.gov.uk holds no consolidated revised text of the 1992 Regulations. What you can read there is the original 1992 wording, so treat regulation numbers as a guide and check anything load-bearing with an adviser.

Because each financial year is a separate debt sitting at its own stage of recovery. Regulation 19(1) makes a demand notice relate to one dwelling and one financial year only.

How a live year turns into arrears

Miss an instalment and the council serves a reminder notice giving seven days. Pay within that and the account goes back on track, as what a council tax reminder notice is explains.

Miss it and the balance for the whole remaining year falls due, and a final notice follows. Why you lose the right to pay council tax in instalments sets out the sequence.

What that costs

The council can then apply to the sheriff court for a summary warrant, which adds 10 per cent of the sum remaining due and unpaid under paragraph 2(2) of Schedule 8 to the Local Government Finance Act 1992, once, when the warrant is granted.

So a misallocated payment does not just move money between two columns. It can turn a manageable current year into a second warrant with its own 10 per cent, and how much the 10% summary warrant penalty is puts a figure on that.

Where the money usually lands

You can ask, and that is worth knowing precisely because it is policy rather than law. Say in writing, at or before the moment you pay, which financial year the payment is for.

Ask, rather than assume

A demand notice relates to one dwelling and one financial year, so the year is the unit that matters. An instruction that does not name one is not really an instruction.

Allocation policy is not identical across the 32 Scottish councils, and some are readier to follow an instruction than others. Treat it as something to agree rather than something you are owed.

The instruction also has to arrive with the payment or before it. Asking six weeks later to have a payment moved is a request to correct the record, which is a slower conversation.

What to put in the instruction

Send it by email or through your online council tax account so there is a timestamp on it, and how to reach the right council team about council tax arrears covers who to send it to.

Where you have less room to choose

Money collected under a summary warrant is being recovered for the debt that warrant covers, and it is not a voluntary payment. A direct debit for the current year is already tied to a specific bill, which is one reason keeping it running matters.

Less than you would expect. Even a large council’s published, committee-approved debt policy tends to rank debts by kind and to say nothing at all about years.

The clearest published example

The City of Edinburgh Council’s Corporate Debt Policy, approved by committee on 9 December 2025, has a hierarchy of debt section putting former housing rent first, council tax arrears second and care charges third.

It says nothing about how payments are allocated between different years of council tax. That silence is the finding rather than an oversight in the reading.

What follows for you

The oldest-year convention is a billing-system default, not a published rule and certainly not a statutory one. Ask your own council for its corporate debt policy, because it is a published document, and why council tax recovery rules differ between Scottish councils explains what else it will and will not tell you.

Onward to Scottish Water, in a proportion the law fixes. Article 4 of the 2023 collection Order apportions what a council collects pro rata between the council tax and the water and sewerage charges it collects as Scottish Water’s agent.

The mechanism

Article 4 of the Water and Sewerage Services to Dwellings (Collection of Unmetered Charges by Local Authority) (Scotland) Order 2023, in force 1 April 2023, sets out what a council must pay over to Scottish Water out of what it collects, and it works pro rata.

It is an accounting rule between the council and Scottish Water rather than a rule about your account. It fixes what the council must hand over, not how your own payment is split.

What it does not settle

It says nothing about which year an individual payment is credited to, and nothing about how a part-payment is divided between the council tax and water lines of your own bill. Both are matters for the council’s own practice, and both are worth asking about in writing.

An earnings arrestment recovers the specific debt it was served for, at a figure set by the statutory tables. You cannot redirect it, so any live bill still has to be paid separately.

What comes off, and from what

Deductions come out of net earnings, after income tax, National Insurance and pension contributions. Monthly net pay of £750.00 or less produces nothing, the weekly nil threshold is £172.61, and how a wage arrestment is calculated on monthly pay works through the bands.

Those thresholds came into force on 6 April 2025. Your employer may also take £1.00 per payment as an administration charge, on top of the arrested amount.

Only one at a time, and why that is not relief

Only one diligence against earnings can operate against the same employment at a time, so a second year of arrears does not appear as a second deduction. Whether you can have more than one wage arrestment at the same time sets out what happens instead.

The unpaid year is still building in the background, and the council can apply for a fresh summary warrant on it with another 10 per cent. If you can pay anything at all towards the live year, say in writing that it is for that year.

Ask the council in writing to reallocate it, quoting the date, the amount, the payment reference and the instruction you gave. Councils can correct allocation on their own accounts.

What to include in the request

• The payment date, the amount and the reference number.
• The original instruction, quoted, with the date you sent it.
• Which year it should have gone to and which year it went to instead.
• The consequence, for example that an instalment plan has now defaulted.
• A request for a written reply and a corrected statement.

If the council will not move it

Use the council’s own complaints procedure, in writing and factually, because it will be read by someone who was not involved. What happens if you break a council tax payment arrangement covers where that leaves an arrangement.

When the argument is about liability rather than allocation

Those are different things. If you are saying you were not liable for a period at all, that is an appeal to the Local Taxation Chamber of the First-tier Tribunal for Scotland, which took over that work on 1 April 2023.

If the arrears across both years are simply beyond what you can pay, allocation stops being the main problem. mygov.scot’s guidance for people who cannot pay and our council tax debt advice page set out the routes.