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Around 20 million households will receive £100 in their bank accounts next year to help with the rising cost of energy bills.
John Healey delivered a “cost of living Budget” on Wednesday extending the VAT cut on electricity bills and raising the minimum wage 3.9 per cent for 2.3 million workers to give people “breathing space” at a time of economic uncertainty.
As part of a raft of measures aimed at helping hard up households, residents in council tax bands A to D will get a £100 payment at the start of 2027.
But the extra cash comes at a time when the Energy Price Cap is predicted to rise by more than 25 per cent in January, which will hike up energy bills further.
Here, the Independent breaks down who will get the extra money and how it will be paid.
How will the money be paid?
The £100 payment will be deposited by local councils straight into the billpayers bank account in January.
Those who pay council tax by direct debit will automatically receive the £100 as the council already has the bank account details.
But those who pay their council tax another way will need to provide bank details. The government has said local authorities will make those arrangements.
How much will it help?
Although £100 is a lot of money to many, it may not stretch that far.
That’s because the Energy Price Cap will rise at the start of 2027, meaning the typical energy bill is predicted to jump by £276 in January, according to consultants Cornwall Insights.
As a result, adding £100 to household bank accounts will not cover the extra costs.
Who is eligible for the payment?
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The payment is only on offer to those living in properties which are in council tax bands A to D, the government has said.
In England households can check their council tax category on the government website, it will also be printed on any paper bills.
The band in which a property falls is tied to its value. However, there has been much criticism of the current system, with the last full valuation being carried out in 1991.
Experts have also pointed out that the current banding system has failed to keep up with property price inflation, which has been unequal across the UK over the past three decades.
As a result, high value properties could well be in band D, especially in London, opening the door to criticism over how well the measure is targeted.
Will students and those who don’t pay council tax get any cash?
Students are exempt from council tax, but that doesn’t mean they won’t be eligible for the extra cash.
Those living in halls will not get any money as student accommodation of this type is not in council tax bands A to D.
But students living in properties that are in tax bands A to D, in a property let by a landlord or a private home, will get the money.
Because students do not pay council tax local authorities will need to find a way of giving them the payment.
Others who do not pay council tax due to another reason, but live in properties with a council tax A to D will also be eligible.
However, the details on how the money will be distributed is yet to be confirmed.
Do you need to use the money on bills?
The money will appear directly into bill payers bank accounts, but the money can be used as people please — it doesn’t need to go straight on paying for gas and electricity.
Will households in Wales, Scotland and Northern Ireland get the payment?
Funding will also be given to Wales, Scotland and Northern Ireland for those nations to arrange similar schemes.
The chancellor has urged the devolved governments to also give people outside of England “breathing space” on their energy bills this winter.
So far, the Welsh government has confirmed it will make the same payment to eligible households in tax bands A to D.
The Scottish government is also looking to replicate the payment, while the Northern Irish government would need to agree to the policy in their budget.
