Opinion: Council Tax rebate is a well-intentioned mess

Opinion: Council Tax rebate is a well-intentioned mess

The £150 Council Tax rebate is aimed at providing some help just as energy bills rocket, but it's a muddled idea.

John Fitzsimons

Household money

John Fitzsimons
Updated on 4 March 2022

From next month, millions of households across the country will receive a Council Tax rebate worth £150.

The Council Tax rebate was announced by Rishi Sunak, the Chancellor of the Exchequer, last month as a way of providing some support to households facing the threat of all sorts of rising bills, not least the enormous jumps in energy bills.

The Council Tax rebate is being paid at the start of April, coinciding with a big jump in the energy price cap.

Ofgem, the energy regulator, has confirmed that from next month the maximum amount an energy supplier can charge on their standard, or default, tariff will increase by almost £700 to an average of £1,971 per year.

It is being followed by a £200 ‘discount’ on energy bills for electricity customers across Britain in the autumn.

Unlike the rebate though, this discount is essentially a loan, as you will have to pay it back automatically over the next five years.

There has been plenty of confusion around the Council Tax rebate, and understandably so.

Let’s be honest, the whole thing is a bit of a mess.

Unnecessarily complicating matters

Going down the Council Tax route is complicated since the Government can only hand out the rebate to English households.

It’s come down to the devolved Governments in Scotland and Wales to come up with their own ideas for offering their residents some support, and while in the end they have more or less matched what’s happening in England, it could easily have ended up very differently.

The other issue with focusing on Council Tax is that the bands are a complete nonsense.

Your Council Tax band is decided by how your home was valued more than 30 years ago, and have nothing to do with the current world.

It’s why every year we hear tales of the wealthy who have tiny Council Tax bills, while those in more modest homes have to pay out enormous sums.

Besides, do you have any idea what band you’re in without looking it up? I know I don’t.

Deciding that everyone in a house in band A-D needs help, while those in higher bands don’t, is a daft way of handling the situation.

There will be plenty of people now receiving help who, even given the way bills are rising, don’t really need it.

Meanwhile, there will be people in homes outside of those bands who have to go out of their way to request the additional help in place.

Rather than handing out a blanket £150 to everyone within specific Council Tax bands, the Government could have used the money more effectively to provide a greater level of support to the people that actually need it.

Yes, this would have been a bit more of an involved process than simply dishing out money to everyone who pays their Council Tax by direct debit, but equally, it could have meant that those who really need some support get more of it.

Given the confusion around precisely how the Council Tax rebate will work, here at loveMONEY we’ve put together the following guide to outline everything you need to know about the Council Tax rebate.

What is the Council Tax rebate?

The Council Tax rebate is being launched by the Government in order to give households a helping hand with the rising cost of living, particularly the astronomical increases coming to energy bills. It is worth £150 to eligible households.

Who can get the Council Tax rebate?

The Council Tax rebate is being paid to households in England that fall within the A to D bands for Council Tax.

The Government reckons that around 20 million homes fall into this category.

The rebate does not have to be repaid either ‒ it is there to help take the edge off the bill hikes on the way.

The devolved Welsh and Scottish Governments have announced their own Council Tax rebate schemes, which also will see £150 handed to households within the A to D bands for Council Tax.

How will I get the Council Tax rebate?

This all comes down to how you currently pay for your Council Tax.

If you pay by direct debit, then the money will be paid automatically into your account in April. You don’t have to do anything ‒ it will all be handled for you.

Things work slightly differently if you don’t pay by direct debit though.

In this situation, you’ll have to wait for your council to contact you, and invite you to make a claim for the Council Tax rebate. It’s not clear how long this could take, so you could be waiting a while for that £150.

As a result, if you don’t already, it makes a lot of sense to switch to paying your Council Tax by direct debit as soon as possible.

I don’t qualify for the Council Tax rebate ‒ can I still get help?

Obviously, if you live in a property that is within the E to H bands of Council Tax then you are excluded from the Council Tax rebate.

That doesn’t necessarily mean you can’t get any help though.

The Government has also set aside £144 million for councils, allowing them to provide discretionary support to low-income households within these tax bands.

However, if you don’t pay Council Tax then you won’t receive the rebate.

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