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cost of living payment
cost of living payment

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Cost of Living Payment: What You Need to Know

Let's look at how these payments work and how to find out if you are eligible.
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To help residents cope with the increased cost of living, the UK government recently announced a support allowance package of £37 billion that includes fuel duty cuts and support payments.

The Cost of Living Payment started on July 14 this year and is available to eight million low-income Britons. 

Let's look at how these payments work and how to find out if you are eligible.

How the Cost of Living Payment works

The Cost of Living Payment is a total of £650 that will come in the form of two payments. The first payment of £326 has already been sent to many households.

An exact date for the second payment of £324 hasn't been announced, but it will likely be during the winter. The payments will automatically be made into the bank account that people typically use to receive benefits

In addition to the above, during October this year, every UK household will receive a minimum of £400 to help with rising energy bills, which are set to increase by hundreds of pounds this winter.

This includes a £66 discount applied to their energy bills in October and November 2022, and £67 per month from December to March 2023.

This will be given in instalments over six months. It replaces the previous plan of giving a £200 energy rebate, which would have meant that households had to pay it back.

Pensioners may also get additional help with a £300 extra one-off payment during the winter.

In addition to the £650 Cost of Living payment, more than six million Britons with disabilities will receive £150 in September, to assist with energy-intensive equipment. 

During November or December, a £300 once-off payment will be given (Pension Cost of Living Payment) to eight million pensioner households in the UK.

The extra £300 payment will be paid out in addition to the Cost of Living Payment, which means that some households will effectively get a double-boost this winter.

Who is eligible?

Anyone currently on benefits should automatically qualify for the £650 Cost of Living Payment. This includes:

  • Universal Credit

  • Income Support

  • Working Tax Credit

  • Child Tax Credit

  • Income-based Jobseekers Allowance (JSA)

  • Income-related Employment and Support Allowance (ESA)

If you are eligible, you may get the Cost of Living Payment of £650 paid in two instalments of £326 and £325, respectively. If you and a partner claim together, there will be one payment of £326 and one payment of £324 for your joint claim.

You can check if you are eligible for the Cost of Living Payment here.

Universal Credit

To get your first payment of £326, applicants must qualify for Universal Credit for the period between 26 April 2021 and 25 May 2022.

The Cost of Living payment will be made separately from your Universal Credit benefit.

Disability Cost of Living Payment

You may also qualify for a lump sum of £150 if you are getting any of these benefits:

  • Attendance Allowance

  • Disability Living Allowance for adults or children

  • Constant Attendance Allowance

  • Personal Independence Payment

  • Adult and Child Disability Payments (in Scotland)

  • War Pension Mobility Supplement

  • Armed Forces Independence Payment

You must have received a payment from one or more of these qualifying benefits for May 2022 to qualify for the lump sum payment of £150.

Note that if you get a disability payment from both the Ministry of Defence (MOD) and the DWP, you will only get the Disability Cost of Living Payment from the DWP.

These payments will be made from September 2022.

Pensioner Cost of Living Payment

You’ll get an additional £300 for your family paid with your regular payment starting in November 2022, if you are eligible for a Winter Fuel Payment for the winter of 2022 to 2023.

All Cost of Living Payments from benefits or tax credits are in addition to this.

Your circumstances will determine the total amount of the Winter Fuel Payment you receive during the winters of 2022–2023. These sums only apply to the winter of 2022–2023.

Energy bill grants

Initially, the public was given a discount of £200 off their energy costs this year by the former UK Chancellor Rishi Sunak. The program, nevertheless, was roundly criticised for being a "loan-not-loan" that you couldn't opt out of and had to pay back at a rate of £40 per year — even if you didn't receive it.

The Energy Bills Support Scheme will now be available to every home in England, Scotland, and Wales. This won't be deposited into your bank account like the Cost of Living Payments. Instead, the amounts will be credited to your energy provider's account directly.

However, as an added bonus, you won't be required to repay this one.

This grant is not subject to application, and it should show up on your account in the autumn. You will probably get a voucher instead if you are on a pre-payment meter, though the specifics are still up for debate.

Furthermore, tenants are complicated. You won't necessarily benefit if you pay your landlord for energy use. Additionally, there are instances where individual energy meters are installed in HMOs. However, it is not yet known how these issues will be resolved.

Winter Fuel Payment

In order to assist the elderly and those living on fixed incomes dealing with the increased cost of heating their houses during winter, Winter Fuel Payments were implemented.

Typically, in order to qualify, you must have been born on or before September 25, 1956.

According to the government, pensioners may get an additional £300 as a one-time payment starting in the autumn. Depending on eligibility, the winter fuel savings plan normally ranges between £250 and £600.

The payment is paid automatically if you get a state pension. Alternatively, if you believe there is a case for more assistance, you must make a claim.


Is there any other financial help available toward the cost of living?

The record high fuel prices in the UK are being investigated by the Competition and Markets Authority (CMA), and they will be analysing whether or not the correct savings are being passed to motorists at the fuel pumps.

If you are struggling and need urgent financial help, you can consider these resources:

What if I have an overdraft?

You have the option to ask your bank to pay specific invoices before you repay the overdraft you owe them when your Cost of Living Payments arrive. This is referred to as the first right of appropriation.

Are there back-dated payments?

Your Cost of Living Payment may come later, e.g., if you changed your account where your benefits or Tax Credits are paid into or were awarded a qualifying benefit at a later date. In this case, you will still get the Cost of Living Payment automatically and there is no need to contact the HMRC or DWP.

What is the maximum payment allowed?

As an example, you may be entitled to £650- £800 for means-tested payment and £150 for disability payment if you are under the State Pension age, get Universal Credit, and also apply for Personal Independence Payment (PIP).

Similar to the above, a person over the State Pension age who applies for Pension Credit and PIP may be entitled to both the £800 (as stated above) and the additional Pensioner Cost of Living Payment of £300 that will be added to Winter Fuel Payments in November and December.

If you feel that you have a complicated mix of benefits, speak with the DWP or an impartial benefits expert, such as Citizens Advice, to learn more about the assistance you’ll get.

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