Council Tax Energy Rebate payments if you have an overdraft

Where payments are made directly to bank accounts, there is a chance the lenders could offset it against overdrafts or other bills. The guidance states: “Councils may wish to provide information as part of their application process on how eligible households can exercise their first right of appropriation on the £150 payment, so their bank doesn’t use it to pay off any overdraft.”

If you are overdrawn, or worry that you might become overdrawn, you can write to your bank to ask them to use this Energy Rebate to pay energy bills or any other bills first. This is called ‘first right of appropriation’.

You should write as soon as you think there might be a problem, ideally at least 7 days before the direct debit or standing orders are due to go out. If your bank does put your £150 Energy Rebate money towards paying off your overdraft when you need it to pay energy or other bills, you can complain.

You can use our examples: 

Sample letter to Bank

[Add Name and Address of Bank]


Dear Sir/Madam,


I am writing to inform you that I am due to have the Council Tax Energy Rebate of £150 paid into my account shortly, and I wish to use my first right of appropriation for this money, for the following purposes.

Energy or other bills £150.00

I have set up a standing order/direct debit/will withdraw the money for the above use, and I would be grateful if you would ensure that any other payments out of my account do not interfere with this withdrawal.

Yours faithfully,


[Enter your Address]

Sample complaint letter to Bank

[Add Name and Address of Bank]

Dear Sir / madam,


On (insert date), I personally delivered the attached letter exercising my common law first right of appropriation in respect of payments in order to maintain my basic living requirements.

Instead of accepting this appropriation, your staff refused to abide by my common law rights. The bank has instead appropriated my payments for the purpose of paying an overdraft largely consisting of collection charges.

I am aware of the FSA waiver (in respect of the current OFT test case), which expressly requires the bank to consider hardship. I am also aware of the Banking Code, which requires you to behave sympathetically.

Please consider this letter a formal complaint under your complaints handling scheme set up under the consumer credit act 2006. I request acknowledgement of this letter in a reasonable timeframe, with a copy of your companies’ complaint procedure.

Yours Sincerely


[Enter your Address]

You can find information to help you claim back any resulting bank charges at the Money Advice Service.

Page last reviewed: 06 May 2022