UK ONS to treat England council tax rebate as credit
A one-off £150 cut in English household council tax payments in April will be treated as tax credit rather than a reduction in liabilities, the Office for National Statistics said on Monday.
The rebate was part of a range of measures to compensate households for surging energy bills, along with a £200 repayable loan to help meet gas and electricity costs that have spiked o the back of fast-rising wholesale prices.
Economists and bond investors are watching to see if the ONS treats the council tax cut as a price reduction that will lower headline inflation rates.
"The ONS has concluded there is no reduction in Council Tax liability and the Council Tax rebate in England should be classified as a payable tax credit, specifically as a current transfer paid by the central government subsector to the households sector," the statistics office said.
Council tax is not included in the main consumer prices index (CPI) measure targeted by the Bank of England, which the central bank expects to hit a 30-year high of more than 7% in April when regulated household energy bills surge by 50%.
However, 'council tax and other rates' make up 4.50% of the basket of goods and services which goes into the retail prices index (RPI) measure used in commercial contracts and to calculate interest payments on £500bn of inflation-linked government bonds, Reuters reported.