Almost every household in the UK will have seen the first instalment of a £400 energy rebate hit their bank accounts in October 2022. The rebate was announced earlier in the year by then Chancellor (now Prime Minister) Rishi Sunak to help with sky-high energy bills amid the cost of living crisis.
Energy prices have soared over the last 12 months, leading to an unprecedented rise in energy bills for millions of households across the country. Even though the energy price cap (opens in new tab) has effectively been replaced by an energy bill freeze known as the Energy Price Guarantee (opens in new tab), we're still paying more for our energy than ever before. As a result, families will be understandably concerned about how much their energy bills will cost (opens in new tab) as we head into the winter months.
The government originally announced a £200 discount to energy bills that was to be repaid over a five year period. That idea was then scrapped and replaced with the £400 energy rebate that does not need to be paid back.
Senior personal finance analyst, Sarah Coles (opens in new tab) from investment company 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.”
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 29 million households in England, Scotland and Wales will benefit from the £400 energy grant. Equivalent support will be provided to households in Northern Ireland.
If you rent, you will also get the payment, as long as you are the one 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 to you. But there are rules in place (opens in new tab) to protect tenants and ensure any discounts are passed along.
Those who live in a mobile home, such as a park home or houseboat, will also receive support equivalent to both the Energy Price Guarantee and the energy rebate. Those who don't use mains gas for their central heating will benefit from an Alternative Fuel Payment. According to the government (opens in new tab): "Households eligible for these payments will receive £100 as a credit on their electricity bill this winter."
The good news is that this is a payment you can keep - you will not have to pay anything back.
How will the £400 energy rebate be paid?
The £400 energy rebate will be made from October 2022 and will either be knocked off your energy bill before you pay it, or you will receive it as a refund after you have paid your bill. You do not have to apply for it. The rebate will be paid automatically and you will not be asked for your bank details.
Households will see a discount of £66 applied to their bills in October and November, followed by a £67 discount applied each month between December and March 2023. The discount will be administered by your supplier on a monthly basis, regardless of whether you pay monthly or quarterly.
If you pay your energy bills by direct debit, you'll get the discount either as a reduction to direct debit amount collected, or, if your normal direct debit amount is collected, you'll receive a refund to your bank account in the same month.
Goodto.com's Money Editor Sarah Handley (opens in new tab) says: "While the Energy Price Guarantee will protect families from rising energy bills over the winter months, we're still paying more for our energy than ever before. The £400 energy rebate will help to soften the blow."
How will prepayment meter customers get the rebate?
Smart prepayment meter customers will have the discount automatically applied to their account in the first week of each month.
Those with a traditional prepayment meter won't have the discount applied automatically, but will instead be sent vouchers by text, email or post in the first week of each month. These will then need to be redeemed at your usual top-up point.
However, according to the Post Office (opens in new tab), which is the UK's biggest voucher processor, only 60% of those eligible had redeemed the vouchers by the end of October. As each voucher is only valid for 90 days, people are being urged to redeem their vouchers as soon as possible. If you have been saving your voucher for when the weather gets colder, make sure you redeem it within 90 days of it being issued.
If you have not received a voucher despite being eligible, then it's vital to check that your energy supplier has the correct information for you on file, including your mobile phone number.
How are specific suppliers applying the discount?
If you are a British Gas or EDF or Scottish Power customer who pays by direct debit, you will pay your direct debit as normal, but will receive six direct payments to your bank account (one a month) from October. This essentially works like a refund. You will receive your ‘refund’ after your direct debit has gone through.
If you pay by cash, card or cheque, the discount will be applied to your account in the first week of each month. You will then only need to pay the remaining balance.
Similarly, if you are an OVO Energy direct debit customer, you should see the discount applied shortly after the payment has been made. If you pay on demand, the rebate will be credited to your account in the first week of each month.
However, if you are a Shell Energy or E.ON direct debit customer, the discounts will be taken off your bill before your direct debit is taken.
Check with your supplier if you are unsure how the rebate will be paid to you, but rest-assured that your supplier will administer the rebate and you don’t need to worry about applying for it.
Can I get additional help if I am on benefits?
The 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.
- A £650 one-off payment (opens in new tab) 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 instalments, 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 has been 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 10.1% and expected rise again 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.
We know this is a difficult time for many people as household budgets come under pressure. If you need to talk to someone, there is free support from the Samaritans (opens in new tab). You can call for free on 116 123.
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