All households in the UK will see their energy bills discounted by £400 in October as part of a new cost of living measure announced by the government.
With household energy bills expected to rise to an average £2,800 in October when the latest energy price cap (opens in new tab) comes into play, the government has pledged to elevate some of the pressure on household finances.
The £400 rebate will replace the original £200 one announced earlier this year - and you do not have to pay it back. “Not a penny to repay,” chancellor Rishi Sunak said when announcing the help package.
Sarah Coles (opens in new tab), senior personal finance analyst, Hargreaves Lansdown, said: “The government has offered a lifeline to millions of people struggling to keep their head above water. There’s no doubt that this will help keep many families afloat, especially those in the most desperate circumstances, some of whom will see state support that matches the rising cost of energy.”
The £400 energy rebate is just one of a series of measures, part of an overall £15 billion cost of living support package, announced by the chancellor.
Who will get the £400 energy grant?
This payment will be made to all households that pay for their energy, regardless of their income.
It is expected that around 28 million households in England, Scotland and Wales will benefit from the £400 energy grant. Equivalent support will be provided to households in Northern Ireland, but this is still being worked out.
If you rent, you will also get the payment, as long as you are paying the bills. If you are a tenant who pays rent to your landlord that includes bills, then you will not receive the energy bill rebate, unless your landlord passes it on by reducing your rent possibly.
How will the £400 energy rebate be paid?
The £400 energy rebate will be made from October 2022 and will be knocked off your energy bill. You do not have to apply for it. The rebate will be paid automatically.
If you use a pre-payment meter, the £400 will be applied to your meter or you will be given a voucher.
The energy companies are still working on the finer details, and we will update you as soon as we know more about the payments.
Do I need to pay the £400 energy grant back?
The good news is this is a payment you can keep - you will not have to pay anything back.
To fund the payments, the government has instead posed a 25% windfall tax (opens in new tab) on gas and electricity company profits, which will raise around £5 billion over the next year.
‘It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this,’ Sunak said.
Can I get additional help if I am on benefits?
Sunak’s cost of living package doesn’t just stop at the £400 energy rebate - if you are on low income, a pensioner or receiving disability benefits there is more help for you - amounting to a help package worth £1,500.
This includes:
- A £650 one-off payment will be made to around eight million on low-income households in receipt of universal credit, tax credits, pension credit, and legacy benefits. The payments will be made directly into bank accounts in two tax-free installments, in July and then in autumn. It will not count towards the benefit cap.
- £300 to pensioner households. More than eight million pensioner households who receive the Winter Fuel Payment will receive an extra £300. It will be paid in November or December and should cover all nearly all pensioners.
- £150 to individuals receiving disability benefits. Around six million will get the one-off £150 payments. To be eligible, people must be in receipt of, or in the process of a successful claim, one of the following benefits: Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Scottish Disability Benefits, Armed Forces Independence Payment, Constant Attendance Allowance or War Pension Mobility Supplement. It will not count towards the benefit cap. This payment is expected in September and will be made automatically - you do not need to apply for it.
And of course, there is also the £150 council tax payment (opens in new tab) announced earlier this year, which is in the process of being paid to households in council tax band A to D.
Is other help available for the cost of living and bills?
The cost of living package is much-needed, but with inflation at 9% and expected to hit over 10% later this year, households will still be struggling with costs of everything from food, fuel to energy. If you are struggling with bills, it’s important to speak to debt charities like StepChange or National Debtline for help as soon as possible. See our advice on how to seek help with energy bills (opens in new tab) for more information.
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