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15 Feb 2022

Millions of households to get £350 boost to help with cost of living: are you eligible?

Which? explains who will qualify for the council tax rebate and energy bill credit loan

The government has outlined measures to help households with the rising cost of living, with millions in line to see energy credit loans and council tax rebates in the coming months.

This comes as energy regulator Ofgem announced that the energy price cap would rise annually by £693 in England, Scotland and Wales from April - meaning bills for the average customer will rise to £1,971.

In his statement on 3 February 2022, Chancellor Rishi Sunak said the help aims to 'take the sting' out of the price rises, and spread the extra energy costs over time.

A week later, on 10 February, SNP finance secretary Kate Forbes announced similar plans to issue council tax rebates to households in Scotland.

On 15 February, Welsh finance minister Rebecca Evans revealed similar measures would be rolled out in Wales.

Here, Which? outlines what help the government is planning to roll out to ease the cost of living crisis.

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£150 council tax rebate in April

In the same month the new energy price cap is set to kick in, the government says all of those in England living in properties in council tax bands A to D will receive a £150 rebate, which will not need to be repaid.

The rebate is not means-tested, as the Chancellor noted that price rises are affecting those on middle incomes, as well as lower incomes.

Local authorities are expected to credit people's accounts with £150 in April; if you pay by direct debit they will use your saved bank account details.

As council tax systems in Scotland, Wales and Northern Ireland work differently from those in England, these devolved nations are expected to receive £565m of Barnett funding as a result of the council tax rebates being granted in England.

£150 council tax rebate for 1.85m Scottish households

On 10 February, Kate Forbes announced that 73% of Scottish households would also receive a £150 council tax rebate in April 2022.

The rebates will go to those in all council tax bands that are currently part of the council tax reduction scheme, plus those in council tax bands A to D in Scotland.

While Forbes indicated her preference for the rebate to be distributed as a payment, local authorities also have the option to issue it as a council tax credit if necessary.

'Immediate' £150 council tax rebates in Wales

On 15 February, the Welsh government announced it would be issuing £150 council tax rebates 'as soon as possible' to Welsh households in council tax bands A to D, and to those in the council tax reduction scheme.

£200 energy credit loan in October

All domestic electricity customers will receive a £200 credit on their energy bill in October 2022.

The government will initially meet the cost of these payments, but you'll have to pay them back.

The £200 will automatically be taken via your energy bills; you'll pay it back in £40 instalments over the next five years. This will begin in 2023, when it's expected that wholesale gas prices will have reduced.

Northern Ireland will be funded with around £150m comparable funding through the Barnett formula next year as energy policy is devolved.

£144m fund for local authorities

Local authorities will be given a discretionary fund to help those on low incomes, as well as vulnerable residents - particularly if they do not pay council tax and therefore won't be able to receive the rebate, or who pay council tax on properties in bands E to H.

How much financial help is given, and who is eligible to receive it, will vary between local authorities.

Warm Homes Discount extension

The Chancellor also confirmed that plans are set to go-ahead to expand the eligibility of the Warm Homes Discount. Under the new rules, it's expected that 3m households will be able to benefit from the scheme.

There are also plans for a £10 uplift to £150, from October.

Currently, the Warm Home Discount is only paid to those who receive the 'guarantee credit' element of pension credit, or if you're on a low income or receive certain means-tested benefits - but each energy supplier has its own criteria for what does and doesn't count.

The government says more detail on which households will qualify will be published after a consultation.

What if I can't afford my council tax bill?

If you don't qualify for the new government rebate, or you're still struggling to pay your bill once you have it, you should contact your local council as soon as possible. The penalties for non-payment of council tax are strict, and can quickly escalate to legal action.

Your council may be able to reduce or reschedule your payments - for instance, spreading the cost for you to pay 12 times a year rather than 10.

If you're deemed to be experiencing 'exceptional hardship' for reasons out of your own control, you may also be granted hardship relief - but this is usually only for a set amount of money or time.

For those on low incomes, or if you claim certain benefits, you may be able to apply for a council tax reduction.

Editor's note: This story has been updated since it was first published. We've removed references to an energy discount and renamed it as a credit loan, to be clear that this money must be repaid.