Warning as thousands of people with an overdraft could miss out on £150 council tax rebate – how to avoid it
THOUSANDS of people could miss out on a £150 council tax energy rebate because they are in their overdraft.
The government announced the cash help for millions of households to help cover the rising cost of energy bills.
But the vital handout could end paying off the debt of anyone who is in their overdraft.
The £150 cash is being dished out by local councils as a one-off cash payment into bank accounts.
Millions of households are getting £150 one-off payment if they live in council tax bands A-D.
But that could be a problem for the millions of people who use an overdraft each year.
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Anyone in debt on their bank account could find the rebate payment goes to paying this off, meaning it can't be used to pay essential bills.
Councils are advising anyone affected who needs the cash to pay their energy bill to ask their bank to make the funds available.
Westminster council has said: "If you are overdrawn, you can exercise your first right of appropriation on the £150 payment, so that your bank doesn’t use it to pay off your overdraft."
Residents in Castlepoint, Three Rivers and East Riding are among those who have been advised to do the same.
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You can tell your bank about the payment and that you would not like it used to pay off your arrears through something known as First Right of Appropriation.
Dennis Hussey, money adviser at National Debtline, said: "“If you want to use the ‘first right of appropriation’ you should instruct your bank, ideally in writing."
He told The Sun you'll need to include that:
- you want to use your first right of appropriation
- a payment of ‘x’ amount is due into your account (provide the name, sort code and account number of the account) on a certain date
- and then list how the funds should be distributed by the bank, identifying what bills should be paid for how much and in what order
You can find a online which you can fill in with your own details.
He said: "If you do not know when the council tax rebate is going to be paid in, check your council‘s website or contact them directly.
“It is also important to note that the ‘right of appropriation’ does not give you the right to tell your bank how they use any money leftover.
"For example, if there is any money left over after the bank has followed a customer’s ‘first right of appropriation’ instructions, then the bank can use it to make payments in the usual way.
“If you are looking to use the first right of appropriation because you have an unauthorised overdraft or have exceeded agreed overdraft limits, you should consider getting free debt advice from an organisation like National Debtline."
Many people will have to pay interest on money they borrow through an overdraft, and this can be as high as nearly 50%.
But priority debts should usually be tackled first, as they have the biggest consequences if they go unpaid.
Priority debts include things like rent, mortgage, energy and council tax.
and can help you manage your debt and negotiate with creditors.
When will my £150 council tax rebate be paid?
Payments have already been made to locals in places like Sunderland, Bracknell and East Hampshire.
But some have to wait until later this month and even JUNE as councils work through processing the payments.
When you get your £150 rebate depends on where you live.
Each council will have different systems, dates can vary, and the scheme is new.
You can check your and social media pages for the latest updates on when you will get the cash.
If you have a direct debit set up to make council tax bill payments you're likely to get yours early than if you pay manually.
If you're eligible for the rebate but you don't pay a bill and need to apply you should keep an eye out for a letter.
This could also be the case if you pay your bill manually and the council don't have bank details on record for you.
Your council will be in touch telling you how to apply for the £150.
But beware of scams where criminals are asking for bank details via text, email or call claiming this is how you get the rebate.
Experts have warned about the red flags to look out for so you don't lose cash.
If you're not eligible for the one-off payment you should check whether you qualify for any other help.
You can find out which band you're in to see if you're eligible for the automatic scheme, or need to apply to the fund by using - you just need to enter your postcode.
There are also some exemptions to those in A-D bands, for example if you don't live in the home.
You could challenge your council tax band if you think it's wrong, so you don't miss out on the cash.
But beware a revaluation of your band could put you in a lower band where you pay MORE council tax, so consider the risks.
If you are on a low income or receiving benefits, you could be eligible for a reduction on your Council Tax bill through a separate scheme.
A separate £144million fund has also been launched which local councils can dish out to vulnerable and low income households.
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Some councils like Camden have opened applications for the cash worth up to £150.
And the most hard-up families struggling with bills could be eligible for EXTRA payments on top of £150.
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