ECONOMY
The council tax cashback lottery: Millions to miss out on £150 saving

One is a well-insulated flat in Peckham, South London, that costs less than £400 to heat every year. It’s in a prime location in an area popular with young professionals who work in the City.

The other is a four-bedroom family home in the northern cathedral city of Durham whose owners will have to pay £2,400 every year to keep warm.

Both are on the market valued at £450,000. However, only the flat in London qualifies for the Chancellor’s £150 council tax rebate to ease the pain of the energy crisis — because it is a Band A property.

It means after government support payments, the annual bill could fall to just £26. Yet the owners of the Durham end-of-terrace property will not see a penny.

This is because, despite their home costing far more to heat, it is a Band F property and so ineligible for the council tax rebate.

It is just one of the injustices billpayers have highlighted in the Government’s multi-million-pound support announced last week.

I need help to heat but won’t get any 

Pensioner Chris Walls has an income of £1,300 a month.

The three-bed detached house she paid £230,000 for ten years ago is a Band E property so the retired teacher is not entitled to a £150 rebate as a result.

Mother-of-two Chris, 75, of the Wyre Forest, has been on Octopus Energy’s standard variable tariff since April when her old supplier went bust.

She pays around £60 a month to heat her home — but this could rise to more than £90 in April. She fears she will have to wear two jumpers to stay warm.

Chris says: ‘There are several properties in my area which are similar to mine, but are in lower bands. It feels like discrimination.’

Chancellor Rishi Sunak announced two new packages. The first is a £200 cut to every residential household’s annual energy bill from October.

Yet it is effectively an interest-free loan, as the money will have to be paid back over the following five years. This will add £40 to the cost of everyone’s annual bill.

The other support comes in the form of a £150 council tax rebate that will be paid to households in Band A to D properties only from April.

The council tax bands were set in 1991 and are based on property valuations at that time. Band A are the cheapest homes worth less than £40,000 30 years ago, while the highest Band H properties were worth more than £320,000.

The rebate support means a Band D home now worth £800,000 in Westminster will get the £150 but not a £400,000 Band E home in Wolverhampton, according to property tax reform campaign group Fairer Share.

The group also points out that there are 23,750 homes worth an average of £830,000 in Band D in Hackney, East London.

It is feared that ‘asset rich, cash poor’ elderly retirees could be hardest hit — especially if they live in larger homes that cost more to heat.

Analysis for Money Mail by pensions consultancy Lane Clark and Peacock (LCP) has found that around two million pensioners live in Band E or higher properties. This includes around 460,000 widows and 58,000 single pensioners.

Many retirees also rely solely on the state pension which is to increase by just 3.1 per cent in April — despite inflation now predicted to rise above 7 per cent this year.

Former pensions minister Sir Steve Webb, a partner at LCP, says: ‘Large numbers of pensioners who could be hard hit by soaring fuel bills will miss out on key elements of the Chancellor’s package.

The Chancellor needs to think again about the position of these vulnerable groups.’

Caroline Abrahams, director at charity Age UK, says: ‘Hundreds of thousands of pensioners will be plunged into real financial difficulty as a result [of fuel hikes] and the only way this can be avoided is if the Government thinks again and directs more funding support their way.’

Heat or eat: Tax reform campaign group Fairer Share fears that 'asset rich, cash poor' elderly retirees could be hardest hit — especially if they live in larger homes that cost more to heat© Provided by This Is Money Heat or eat: Tax reform campaign group Fairer Share fears that ‘asset rich, cash poor’ elderly retirees could be hardest hit — especially if they live in larger homes that cost more to heat

The Resolution Foundation think-tank also warned there are holes in the support scheme, with one in ten of the poorest households in England missing out.

The Chancellor’s £200 energy bill cut for every household will only come in the autumn and will have to be repaid over the following five years.

It means an extra £40 will be added to every household bill from April 2023 for five years — even if the billpayer did not benefit from the £200 cut.

For example, this could hit those in shared accommodation or those who now live with their parents who move on to their own property.

Local authorities will be able to help households with discretionary hardship funds but it is feared many elderly and vulnerable people will be unaware they can make a claim.

Dame Clare Moriarty, chief executive of charity Citizens Advice, says the Chancellor’s support package is ‘strange, complicated and untargeted’.

She adds: ‘Linking financial assistance to council tax will result in a complicated lottery that means support is not targeted at people who really need it.’

The Department for Housing says any households that do not pay council tax will be contacted so they can arrange for the £150 to be paid.

[email protected]

I’m giving my tax rebate to charity

Company boss Sarah Merrick says she does not need the rebate, so has already donated £150 to a fuel charity.

The mother-of-two, 43, and her partner Danny both earn salaries above the UK average.

Their four-bed terrace home in Walthamstow, East London, is in Band C for council tax and the couple pay £170 a month on Co-op Energy’s standard variable tariff.

Sarah boss of a wind energy start-up firm, was surprised when she found out her family would be eligible for a council tax rebate and has donated to the Fuel Bank Foundation – which helps people struggling with bills.

She says: ‘Means-testing the rebate would have been far better way of targeting the families who really need it.

 I’d definitely encourage other people in a similar position to us to donate their rebate to charity.’

Source: Dailymail.co.uk

About the author

Related Post

Leave a comment

Your email address will not be published. Required fields are marked *