Budget 2026: Millions of households in Council Tax bands A-D to get £100 payment next year
About 20 million households in England – those in Council Tax bands A to D – will receive a £100 cash payment next year to help with rising energy bills, the Chancellor John Healey has announced. It comes as the Energy Price Cap is predicted to rise by more than 25% in January. The Scottish and Welsh governments have also confirmed they'll make the same payment to eligible households.
The UK Government says it has allocated funding to Northern Ireland to run a similar scheme – the NI Executive told us it will "consider" how to use this funding.
The £2.6 billion scheme mirrors the £150 Council Tax rebate introduced by the then-Chancellor Rishi Sunak during the energy crisis in 2022.
For those that don't qualify, the Government has confirmed it will also provide £100 million in extra funding for local councils in England so they can offer more targeted support to households hit hardest by rising energy bills.
Martin Lewis: This is a 'get over the hump' short-term measure
On ITV's The Martin Lewis Money Show Live on Thursday 29 October, Martin put the £100 payment in the context of the massive expected rise in the Energy Price Cap from January 2027:
The Energy Price Cap – which 60% of homes are on – is based on a time lag. It's based on what happened in the past.
The next Price Cap from 1 January 2027 will be based on wholesale gas prices between 19 August to 17 November 2026 (the link isn't exact but it's pretty close). We're now over two-thirds of the way through that period, and wholesale gas prices have been high for most of it.
Which means – and I don't particularly like having to say this – a predicted rise of 27% in January. The prediction is even higher for April, but that's much more crystal-ball-gazing. If the Middle East conflict were to de-escalate, that would hopefully come down a lot.
I'll be straight with you – 27%, we don't know. But I think it's a pretty safe bet it'll be 20% to 30%. That's what we're looking at.
So if we actually look at what that means for what someone would pay from January to March 2027 alone: it's going to add £115 to a typical bill based on typical use (you may use more, you may use less).
And that starts to explain what the announcement made in the Budget is all about: a "get over the hump" short-term measure.
The payment is for households in Council Tax bands A to D
You're expected to qualify if:
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Your home is in Council Tax band A, B, C or D (you can check your band on Gov.uk).
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The property is your sole or main home.
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You're responsible for Council Tax at that address.
You should still get the payment even if you're exempt from actually paying Council Tax – for example, because you're in a student-only household or on Pension Credit.
However, the Government has yet to publish the full eligibility rules, so some finer details could still change.
Second homes and empty properties WON'T qualify. You're also unlikely to be eligible if you live at the property but aren't the person responsible for its Council Tax bill.
How the £100 will be paid
The payments will be made through local councils in England, Scotland and Wales. Here's what we know so far about how it'll work:
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Pay Council Tax by Direct Debit? You'll get the £100 automatically from January 2027. Here, as the council already has your details, it'll be able to make the payment directly into your bank account.
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Pay Council Tax another way? You'll need to provide your details. The Government told us local authorities will make arrangements so you can submit your bank details.
Important: Fraudsters may use this news as an opportunity to contact you and try to get hold of personal and/or financial details, so remain on guard. Be wary of unexpected emails, text messages, calls or social media posts asking you to apply for the £100 payment or provide your bank details.
If you pay your Council Tax by Direct Debit, your payment should be made automatically. If you don't, your local council should explain how to apply.
If you're unsure whether a message is really from your council, don't respond directly. Instead, find your council's contact details independently (such as through its official website) and get in touch to check. For more help, see our 20 ways to stop scams.
Why is it based on Council Tax bands?
The Government is using Council Tax bands as a broad way of targeting support at households living in lower-value properties. This is a relatively quick and simple way to reach a large number of households, arguably cheaper than means-testing the payment based on income (which would be more precise but also much more complicated to deliver).
Up to 20 million households in England are expected to qualify. The Government estimates that the scheme will reach 88% of households in the lowest three income groups and 83% of households considered to be under particular pressure from energy costs.
Of course, not everyone in bands A to D is on a low income. Council Tax bands are based on the historic value of a property, not the current income or savings of the people living there. This means some better-off households will get the payment, while some people on low incomes living in band E to H properties could miss out – though, as set out below, there is support being put in place if you don't qualify.
Struggling but don't qualify? An extra £100 million is being given to councils
Some households facing financial difficulty will miss out because they live in a higher-band property, the Government says.
Councils in England will therefore receive a separate £100 million discretionary fund to support households that need help but don't qualify for the main payment.
The eligibility rules and application process for this additional support will be up to councils to decide, and we don't yet know exactly what these will look like. If you need help in the meantime, see our full guide on What to do if you're struggling with energy bills.
Electricity bills to stay VAT-free for an extra three months
In addition, a VAT cut on domestic electricity, which came in to effect on 1 October 2026 and had been set to end on 31 March 2027, has now been extended until 1 July 2027.
According to the Government, this will be equivalent to a reduction of roughly £50 a year on bills (based on the current forecasts for the Price Cap from April 2027).
MSE's Budget 2026 coverage
Check out all of our other MSE News stories following the Chancellor's announcements:
Full round-up of the key measures, including MoneySavingExpert.com (MSE) founder Martin Lewis' video analysis of what they mean for you.
The planned cash ISA limit cut for under-65s WON'T go ahead. Also, plans for a 'starter investment ISA' (something Martin's argued for) have been announced. We explain what's happening.
The Lifetime ISA withdrawal fine has been axed for homes above £450,000 in a major MSE win. Plus, the launch of the First-Time Buyer ISA has now been confirmed.
Gas Standing Charges will FINALLY be scrapped in a move MSE has campaigned on for years. Watch Martin's instant reaction and analysis.
State Pensioners with incomes under £13,037 a year to pay NO Income Tax as new allowance introduced.
New 'Your First Home' homebuying scheme to launch in England. It was first announced in September and now more details have been revealed – we explain how the scheme will work.
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