£150 council tax rebate 2022: which council tax bands will get it, how to claim it and when will it be paid?

Rishi Sunak announced the cost of living payment in February when he was still a part of Boris Johnson’s government

The UK cost of living crisis is set to reach new depths this autumn and winter, with dire warnings about how high inflation could go and what rocketing prices could do to public health.

Inflation - which is already at a record high - is set to be driven up massively from October when the new Ofgem Energy price cap kicks in.

While it is currently being criticised by opposition parties for not doing anything to tackle this looming crisis, Boris Johnson’s government has previously introduced several packages of financial support for UK households.

One of the earliest packages - announced by ex-Chancellor Rishi Sunak in February - contained a council tax rebate.

So, if you are yet to receive this payment, what do you need to do to get it - and who is eligible?

Here’s what you need to know.

What is a council tax rebate?

A tax rebate is essentially a refund you receive in the form of credit from HMRC.

You get one when you’ve paid too much tax on, among many other things, your income or a redundancy payment.

Usually, you wouldn’t get a rebate on your council tax - rather, your council tax gets reduced.

Rishi Sunak announced the energy bill support measures on 3 February (image: PA)

If you’ve paid too much council tax or are eligible for a reduction, the council will reduce your future bills rather than return money to you.

There are a number of ways by which you can reduce your council tax payments, although you have to meet specific criteria.

For example, if you live alone, you can get a 25% reduction.

Or, if you’re on a low income, you can share your circumstances with your council and they will work out how much your tax can be reduced by.

How will the energy bills council tax rebate work?

In February, the former Chancellor Rishi Sunak announced households in low-to-middle income areas would receive a council tax rebate of £150.

If you pay by direct debit, the money should have been deducted from your council tax bill automatically.

But for those who do not pay via this method, you have to manually apply to the council.

Many UK Households are having to watch every penny as a result of the cost of living crisis (image: PA)

According to a freedom of information request by the Liberal Democrats that was reported by the Daily Mirror, tens of thousands of eligible households have still not applied for the cost of living payment.

The government says it has urged councils to ensure the support gets to those who need it.

Alongside this package, councils have also been given an extra £144 million pot to support vulnerable households - a pot that has since been increased.

Central government guidance to local authorities released soon after the announcement stated that funding for the rebate and household support pot would be released to councils in March.

It said this money should have been given out “as soon as possible” from April, and by 30 September 2022 at the latest.

Any remaining funds would then return to the Treasury.

Households that do not pay council tax via direct debit could miss out on the council tax rebate cost of living support (image: Adobe)

However, after consumer site Money Saving Expert reported two councils had revealed they would struggle to pay out the rebate before June due to software issues, there have been reports of dozens other councils delaying the payment.

It led a charity to warn some people would not receive the payment until September.

Meanwhile, some households in Leeds received £300 instead of £150 due to a banking error.

Who is eligible for council tax rebate?

The council tax rebate only applies to homes in council tax bands A to D in England, although Scotland and Wales have also opted to introduce the scheme (more on that below).

Mr Sunak said in February that his estimated £3bn plan would help 80% of English households (more than 20 million homes).

The full £150 rebate will even be given to those who are exempt from paying council tax, like students, or who pay a reduced rate of council tax.

How much of a difference this rebate will make depends on where in the country you live.

Households in areas where prices have soared since 1991 - the year used to benchmark the value of properties for council tax - could still be paying some of the lowest council tax bills in the country despite living in high-value properties.

And although more homes will be eligible for the £150 in the North of England than the South, higher council tax rates in the North would mean the money may not go as far as it will in the South.

Will the other UK nations get a council tax rebate?

The Barnett formula - the mechanism that provides Scotland, Wales and Northern Ireland with money equivalent to any Government spending increases in England - will give the devolved administrations around £715m as a result of the energy crisis support package for England.

Scotland and Wales have opted to introduce their own versions of the rebate scheme but Northern Ireland has not because its equivalent of council tax is different to the rest of the UK.

Nicola Sturgeon’s devolved administration has introduced the council tax rebate scheme - but has criticised it for not helping households enough (image: Getty Images)

The devolved administrations’ schemes will be similar to England’s rebate scheme and will also become available from April.

Scotland’s system allows councils to either give the payment out as a cash payment or as credit off future council tax bills.

The rises in the Ofgem energy price cap affects all households in the UK, so it is expected that they will all be forced to take measures to cushion the financial blow.

But the devolved administrations do not have all the levers the UK Government in Westminster has to take action.

For example, they cannot set or alter the rate of VAT, meaning one popular idea to cut VAT from energy bills cannot be pursued by them.

Meanwhile, households in Scotland are set to see a 4.2% increase in their water charges from April.

These are collected alongside council tax as water is nationalised in Scotland.