The £150 cost of living council tax rebate

In March 2022 the government announced they would fund councils to pay £150 to eligible households, to help with the cost of living crisis. This will be done through the council tax system. The English and Welsh rebate schemes differ.

This article is a quick guide to some of the questions raised. If you have feedback or think other scenarios should be covered, please tell us: expertadvicesupport@citizensadvice.org.uk

The article does not offer full advice on council tax liability. For help with a specific case debt advisers should contact Shelter’s Specialist Advice Service.

Main eligibility rules in England

On the 1st April 2022 the client must be in a property that is:

• in band A-D including band E with a disability reduction
• their sole or main residence
• a chargeable dwelling, or is exempt under
• class N — occupied only by students (although not Halls of Residence)
• class S — occupied only by under 18s
• class U — occupied only by people who are severely mentally impaired
• class W — i) where the client lives in one of two or more dwellings in one property and ii) they are a dependent relative of a person over 65 in the other dwelling and iii) that other person is either severely mentally impaired or substantially disabled

The client must be liable for council tax or fall within one of the exemption classes. The guidance can be found in full online.

Main eligibility rules in Wales

On the 15th February 2022 the client must either be in receipt of Council Tax Reduction (CTR) regardless of their property banding, or be in a property that is:

• in band A-D property, including band E with a disability reduction
• be liable for council tax
• not benefit any property exemption
• live in the property as their sole or ‘primary’ residence
• be liable for the utility and other ‘regularly associated bills’

The guidance can be found in full online.

I don’t pay council tax by Direct Debit so how will I get help?

In both nations, where live direct debit or bank details are held the payments will be a direct payment to that account. Otherwise, payments must be claimed by the 30th November 2022 in England (extended from 30th September). In Wales the scheme closed on the 30th September. The options available for payment will be at the discretion of each council.

In England, councils must make reasonable attempts to communicate the scheme. They should offer a route for digitally excluded people. They can choose whether to offer a credit on the council tax account instead of payment.

In Wales, each council will develop an accessible ‘registration form’. They must offer a route for those who are digitally excluded and materials in English and Welsh. There will be awareness raising.

Advisers should actively help those not on direct debits to take up payments and with local councils to understand their processes. This will help some of the most financially vulnerable households.

What if I’m in Band E-H?

In England and Wales clients in bands E-H will need to apply to the discretionary scheme. Those in band E with a disability reduction can apply to the main scheme.

Can I apply for the disability reduction after April 2022, backdate it, and qualify?

The CPAG Council Tax Handbook (13th edition, pg 101) says that any application for a disability reduction can be backdated. Tribunal case law supports this. However, both rebate schemes take a given date as the point of eligibility; the 1st April 2022 in England and the 15th February 2022 in Wales.

The Council Tax (Reduction for Disability) Regs 1992 require an application to be made before someone is eligible for a disability reduction. A backdated disability reduction based on an application made after the relevant date for the rebate schemes, may not retrospectively qualify a client for the rebate. No reduction was in place on the relevant date as no application had been made.

However, we have asked for clarification for both nations as the guidance could be interpreted in a different way.

I get Council Tax Reduction (CTR), so am I eligible?

In Wales clients that were in receipt of CTR on 15th February 2022 are eligible regardless of the band.

In England, there is no automatic entitlement to the £150 rebate linked to CTR. However those who get any CTR are eligible in the same way as those that don’t.

Clients on full CTR are unlikely to have a direct debit set up with the council. Advisers could help these clients to claim their payments separately.

I am a student. Am I eligible?

In England, you might be. Paragraphs 11 and 12 of the guidance says those who are usually exempt, or live in a disregarded property, are still eligible. This includes households of students usually disregarded under class N. Students are unlikely to have a direct debit set up to pay council tax so advisers should help them claim separately.

However, if your client is a student living in a House of Multiple Occupation (HMO) they will not receive the help. Halls of Residence are exempt under Class M and not Class N, so residents in Halls are not eligible for the £150 rebate either.

If there is a resident student owner (as in the student owns the home and lives there but rents out rooms) the property may still be exempt under Class N. The person treated as liable for council tax would be the resident owner. In that case, the resident owner student would get the £150 rebate.

In Wales students will generally not be eligible as a client must be liable for council tax and not benefit from an exemption.

In both nations the discretionary scheme might help those missed by the main scheme.

I live in a House of Multiple Occupation (HMO). Will I get the help?

Whether a property is an HMO is case specific. However, assuming it’s agreed the property is an HMO the client is not entitled to the £150 rebate. In both nations the owner is liable for council tax and nobody will get the rebate. Clients can apply under the discretionary scheme. In Wales, the guidance specifically says identifiable different households in HMOs can each apply to the discretionary scheme.

Whether the property is an HMO is determined on the facts of each case. For council tax purposes, the law says it’s an HMO if:

• The property was constructed or adapted for occupation by more than one household OR
• Each resident is either a tenant or licensee able to occupy part of the property, or licensee liable to pay rent or a fee for only part of the dwelling

In theory a client can challenge the HMO designation. If successful, the tenants would be liable for council tax and not the landlord. The property might still be exempt if all residents are students but think carefully about this.

I am classed as severely mentally impaired (SMI), will I get help?

In England the answer is yes. In Wales the answer appears to be no as the Welsh main scheme is not open to those usually exempt from liability. A partner who is not SMI may still get the rebate though, so long as they are liable. The discretionary fund may also help and advisers should help clients in these cases to claim.

I’m a care leaver, can I get the rebate?

In England there are no special provisions for care leavers in the council tax system. Eligibility for the rebate is assessed as normal.

In Wales, ‘category 3’ care leavers aged 18–24 and no longer looked after by the council, are disregarded for discount purposes (i.e. if they only live with one other person, there would be a single occupancy discount applied). However, before the law changed on the 1st April 2022 care leavers could still be jointly liable for council tax.

This means on the 15th February 2022, the relevant date in the Welsh scheme, they might have been liable for council tax. Despite this we have been informed that all care leavers must apply to the discretionary scheme in Wales.

I have no recourse to public funds, can I apply?

Yes, clients with no recourse restrictions can still get either the main rebate or the discretionary fund, as explained in a further Council Tax information letter issued to councils on the 1st April.

I pay my landlord for Council Tax and bills. Will I get help?

In England, the scheme is not linked to liability for other bills, only council tax. Unless otherwise excluded from the scheme (for instance an HMO) these clients might be eligible even if they pay an amount for council tax to their landlord. Typically as a tenant, you are liable for council tax unless your landlord lives with you.

In these cases, advisers should check tenancy agreements and housing status. The landlord might be named on the bill but may not be the liable person for council tax. Question 13 of the Council Tax information letter explains that councils should not make automatic payments where, for instance, a landlord pays the direct debit but is not liable.

In Wales, you have to be liable for council tax and utility bills. Therefore if you are not liable for the bills and / or Council Tax, you will have to apply to the discretionary fund.

I’m a property guardian, so will I get help?

This is complex but applies the same in both nations.

Property guardians typically have a licence granted by a security firm to occupy empty commercial property.

Each case will be fact specific but case law has determined that property guardians are not liable to pay council tax in some circumstances. The terms of the licence will need to be read. In the case of London Borough of Southwark v Ludgate House [2020] EWCA, the licence allowed for the security firm to move licensees at no notice, between different rooms. There was no ‘exclusive possession’ of a single part of the property, so the guardians were not in ‘rateable occupation.’

If you are advising a property guardian, you will need to examine the contract carefully and get specialist advice. In cases where the security firm operates terms that give them control like in Ludgate, your client might not be liable for council tax and therefore only able to apply to the discretionary scheme.

Will the payment affect my benefits?

In both nations the payments will not be treated as capital for Universal Credit, for 12 months from the date it is received.

Equally the guidance confirms the payments are made as local welfare provision, so will not impact benefits.

Will payments go towards my council tax arrears?

Anecdotally we have heard some councils have reduced arrears with the rebate. Questions 8–10 of this Council Tax information letter explains that it’s allowed in some circumstances. This letter only applies to England.

In England, where the council has no live direct debit instructions, they have to offer other options under para 24 of the guidance. A credit to the bill should not be the only option. If a client accepts a credit to their council tax account, or doesn’t respond to any request for their payment preferences, councils can apply it to the account. The council can choose to allocate this to arrears so long as they make it clear which account they allocate it to.

This applies to main and discretionary schemes.

In Wales the guidance is less clear but the same could apply. Where there is no live direct debit the client will need to complete a ‘registration form’ which might include payment options.

Will the bank just take my money to reduce my overdraft?

It’s possible that a bank will reduce an overdraft with the payment, or the payment might land just as a loan payment goes out. If someone operates within an agreed overdraft limit there should be no problem. If a client is regularly exceeding their limit there is more risk. Banks should follow the notice / engagement process in the FCA Consumer Credit Handbook, rule CONC 5D.3.2R as opposed to simply removing or reducing an overdraft.

If clients are concerned about this issue they can use the first right of appropriation to ‘ring-fence’ the funds for emergency use. Caution is needed as banks might close accounts if a client exercises their right. That said, the rules in CONC and the FCA principles (in this case principles 1, 5 and 6) should be followed. Alternatively a safe account could be opened and new details given to the council.

What are the discretionary fund rules?

Each council will run different schemes and can prioritise who they like. However, there are some suggested priorities in the guidance.

In England:

• Discretionary payments do not have to be linked to eligibility as at 1st April 2022, so people becoming liable for council tax within the year (to 30th November 2022) could apply
• Those on income-related benefits in bands E-H
• Those liable for bills but not council tax
• Top-ups for those eligible under the main scheme

In Wales:

• Payments in kind, for support services like free school meals or meals on wheels
• People who are exempt, such as care leavers and severely mentally impaired
• Separately identifiable households in HMOs
• Those receiving housing support service, in temporary accommodation or people in refuges

There is no right of appeal against a decision in either nation. Complaints could still be made if a council’s own guidance is not followed and escalated to the Local Government and Social Care Ombudsman.

Let us know how it goes

For many clients the process will be automatic if they are on Direct Debit. In England, council tax bills will signpost to the scheme and in both nations, there will be awareness raising. There is a risk that people without bank accounts or direct debits, and in some cases very vulnerable households, might miss out. The priority for advisers will be to identify these clients and help them to claim.

Depending on circumstances a client might also be able to increase their income in other ways, or get help with certain bills. We also have a page specifically for grants for energy bills.

We hope we have answered some questions in this article, but we will update it as we learn more.

Graham O’Malley is a Senior Debt Expert in the Expert Advice Team at Citizens Advice.

The information in this article is correct as of the date of publication. This story was updated on 1st November 2022 to reflect the new 30th November deadline in England.

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