Thousands of households are being warned that they risk missing out on the £150 council tax rebate if they’re in their overdraft.
If you’re in debt to your bank, then the money could end up being used to pay off what you owe.
While it isn’t a good idea to constantly be in your overdraft - ideally, you should only use it for emergencies - the idea of the £150 rebate is to help ease the pressure of rising bills.
If the money goes toward paying off your overdraft, then it can’t be put towards your energy bill or any other increases costs you’re facing.
Councils are advising anyone who needs the cash to pay their energy bill to ask their bank to make the funds available.
Westminster Council has told its residents: "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."
A notice on Redbridge Council reads: “Households can exercise their first right of appropriation on the £150 payment, so your bank does not use it to pay off any overdrafts you may have.
“A sample letter that households may wish to use to exercise their right of appropriation is available on the National Debt website.”
Central Bedfordshire Council also says: “Your payment from being applied to an outstanding overdraft by telling your bank it should only be used for a specific purpose, for example to pay your energy bills.
“This protection is called a ‘first right of appropriation of funds order’.”
Who is eligible for the £150 council tax rebate?
The council tax rebate is being awarded to homes in council tax bands A, B, C or D in England and Wales - this is roughly 80% of properties.
Those who live in council tax bands E, F, G and H in England - or I as well, in Wales - might still be eligible for the payment if they're vulnerable or on a low income through a new discretionary fund being set up.
Scotland residents are entitled to £150 off if they are in bands A to D - but they also qualify if they're currently getting a council tax reduction as well.
If you're eligible, the money won't need to be paid back and will be issued directly from councils from April.
For those who pay by Direct Debit, councils will use the details they have for you in their system to send the money directly to your bank account.
If you don't pay by Direct Debit, councils should invite you to put in a claim and ask you for your account details so they can process the payment.
The Local Government Association (LGA) has urged households to be aware of scammers trying to steal your details, and said councils will never ask for bank details over the phone.
Councils should contact you in writing to ask for your details.
