The UK government is offering payments to help its residents cope with the increased cost of living.
As the UK experiences a surge in inflation beyond 9%, the cost of fuel is perilously close to £2 a liter, and the overall cost of travel, goods, food and services continues to climb, the majority of UK citizens are feeling the sting.
The cost of energy, in particular, is becoming a painful subject for many. Cornwall Insight predicts that the price cap — originally designed to protect consumers from short-term fluctuations in price — will be hiked by 65% to £3,240, an amount that few will be able to manage without help.
There are payments and grants available, and here’s what you need to know about them.
UK cost of living payments explained
The UK government announced a £37 billion support package, including cuts to fuel duty and support payments. In the first wave, £650 will be deposited in the bank accounts of individuals who qualify. The payments are tax-free.
Anyone on means-tested benefits should automatically receive the £650 payment. This includes:
- Universal Credit
- Income-based Jobseekers Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Income Support
- Working Tax Credit
- Child Tax Credit
- Pension Credit
The first cost of living payment
The first payment of £326 is beginning to appear — both clear and pending — in bank accounts now, automatically. You should see it by July 31, but contact your local council for assistance if you don’t. You will see the payment made on your bank account under the reference DWP Cost of Living.
However, if you only receive tax credits, the schedule is different. The first payment will be made in autumn, followed by another around Christmas, but the dates are yet to be made public.
A second payment is coming
The second payment of £324 will be due in autumn, although there is no definite date yet when it will land.
Energy bill grants
Initially, the former UK Chancellor Rishi Sunak offered the public a “discount” of £200 off their energy bills this year. However, the scheme was widely condemned as a “loan-not-loan” that you could not opt-out of and would have to pay back at £40 per year — even if you didn’t receive it.
Now, every household in England, Scotland, and Wales will be part of the “Energy Bills Support Scheme“. Unlike the cost of living payments, this won’t be landing in your bank account. Instead, £400 of credit will be added directly to your energy provider account. As a bonus, however, you won’t have to pay this one back.
You don’t need to apply for this grant, and it’s expected to appear on your account in autumn. If you are on a pre-payment meter, you will likely receive a voucher instead, although the details are still being debated.
Renters are also complicated. If you pay your landlord for energy use, for example, you won’t necessarily benefit. There are also cases when individual energy meters are installed in houses of multiple occupancy (HMOs) — and there is no word, as of yet, how these challenges will be dealt with.
Winter fuel payments
Winter Fuel Payments were introduced to help pensioners and a smaller group of people on fixed incomes deal with the extra cost of heating their homes during the colder months.
Usually, you have to have been born on or before September 25, 1956, to apply.
The government says a further £300 may be offered to pensioners from autumn as a one-off payment. The winter fuel discount scheme typically ranges from £250 to £600, depending on eligibility.
If you receive the state pension, the payment is made automatically. Alternatively, you need to make a claim if you think you have a case for additional help.
Yes. To receive the £650 sum, you have to have claimed for and received Universal Credit for an assessment period that ended between April 26 and May 25. Claimants of income-based JSA, income-related ESA, Income Support, or Pension Credit are also limited to the period of April 26 to May 25.
If you are overdrawn when the cost of living payments come in, you have the chance to ask your bank to pay particular bills before paying off the overdraft you owe to them. This is known as the first right of appropriation.
To make a request, use this example letter.
With the UK government occupied with leadership changes and debate spats, further announcements concerning help in the near future are unlikely.
The Competition and Markets Authority (CMA) is investigating the record prices of fuel in the UK, which continue to climb despite a cut in fuel duty. The watchdog will be analyzing whether or not the savings are being passed to drivers at the pumps.
When it comes to energy, financial expert Martin Lewis has warned the next hike in the energy savings cap could be considered a “national financial cataclysm” for the next PM to tackle. £400 is a start but when estimates suggest consumers will be paying thousands of pounds more over the year, in real-term impact, you can understand why Lewis has suggested “warm spaces” may end up opening alongside food banks this winter.
There is an extra £150 payment for those on disability benefits that will be paid in September. Some households will qualify for a combination of the help on offer and will receive more than one type of payment.
A further £150 rebate on council tax was paid out several months ago to properties in council tax bands A to D, although some councils may still be processing these discounts. Many local councils also have discretionary funds to help you, but you need to contact them directly to be considered.
If you are struggling and need help urgently, check out the resources below:
For further information on what we can expect this year and how inflation is causing chaos worldwide, check out our guides:
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