When will council tax rebate be paid?

Martin Lewis explains how the council tax rebate works

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A £3 billion council tax rebate scheme was announced by the UK Government in February off the back of exponential cost of living pressures. The scheme offers those residing in council tax bands A to D – rented or owned – a non-repayable rebate of £150, as a means to help families as bills spiral.

The council tax rebate, which is said to benefit around 20 million households, is part of a £9.1 billion Government support package, also known as the Energy Bills Rebate to support with living costs in the UK.

Chancellor of the Exchequer Rishi Sunak said: “Right now, I know the number one issue on people’s minds is the rising cost of living.

“That’s why the Government is stepping in with direct support that will help around 28 million households with their rising energy costs over the next year.

“We stood behind British people and businesses throughout the pandemic and it’s right we continue to do that as our economy recovers in the months ahead.”

The wider Energy Bills Rebate support package will provide domestic electricity customers with a discount on their bills worth £200 from October 2022.

The discount will be automatically recovered from people’s bills in £40 instalments over the next five years as of 2023, when global wholesale gas prices are expected to reduce.

The council tax rebate is only claimable by those living in council tax band A to D, however, the Government has said an extra £144 million will be given to councils to provide discretionary support to vulnerable households who may not qualify.

This includes people on low incomes in council tax bands E to H.

Secretary of state for Levelling Up Michael Gove said: “The support we have introduced will help millions of people, particularly those on the lowest incomes and the most vulnerable.

“We continue to stand behind the British people and I urge everyone who is eligible to claim this rebate to do so.”

When will households receive the council tax rebate?

The council tax rebate grants of £150 are due to be paid from April 1, 2022 onwards.

Those who pay council tax by direct debit will see the funds go directly into their bank accounts, and those who do not pay by direct debit will have to make a claim to the council.

The £144 million discretionary fund will be distributed by local councils to provide carefully targeted ‘top-up’ payments to the most vulnerable households in council bands E to H.

Councils will publish agreed guidelines for eligibility of the fund once determined and approved, and the fund will be entirely allocated by November 30, 2022.

How are council tax bands determined?

Based on the value of your home, households in England are placed into one of eight council tax bands ranging from A to H, by the Valuation Office Agency.

Today’s banding is based on the value of your home on 1 April 1991.

Band A – property value up to £40,000
Band B – property value over £40,000 and up to £52,000
Band C – property value over £52,000 and up to £68,000
Band D – property value over £68,000 and up to £88,000
Band E – property value over £88,000 and up to £120,000
Band F – property value over £120,000 and up to £160,000
Band G – property value over £160,000 and up to £320,000
Band H – property value over £320,000

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The banding determines how much council tax households should pay every month and contributes to the services provided by the council.

Council tax covers schools, roads, libraries, support for vulnerable children and adults, and rubbish collections, as well as the police, fire services and other local services.

However, at present, there is a vast disparity between some households’ council tax bills to others – with those residing in areas like Westminster actually paying the least expensive council tax than anywhere else in the UK.

The rate disparity is due to several reasons – for example, if a council is already receiving large amounts of revenue, there’s less need to charge residents for the services in the area.

So the reason Westminster’s council tax is so cheap is that it receives large sums of income from business rates and parking charges.

Westminster also pays less social care expenses as these services aren’t as needed in this area as in others.

Paula Higgins, founder and chief executive of the HomeOwners Alliance said: “The council tax bands were last set 30 years ago in 1991 and is in dire need of reform.

“Basing a tax on 1991 house prices means that properties in areas of highest house price growth are undervalued compared to regions where house prices have not seen the same spectacular level of growth.”

She added: “If the government is serious about levelling up, then the reform of council tax is a no-brainer.

“A fairer system would be to have an annual property tax that is based on the value of the property.”

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