More than eight million households will start to see the second tranche of cost-of-living payments hit their bank accounts this autumn.
A first instalment of £326 was paid earlier this year to low-income households on benefits. The second portion of the one-off £650 payment will start landing from November 8.
The UK Government announced the payments earlier this year as part of a package of measures to help people cope with rising inflation.
Who is entitled to the payment?
The payment is being made to more than eight million low-income households who receive any of the following benefits – Universal Credit, income-based Jobseekers Allowance, income-related Employment and Support Allowance, Income Support, working tax credit, child tax credit and pension credit.
They are being paid in two instalments, with most people receiving the first payment of £326 between July 14 and 31.
In order to be eligible for the first instalment, people had to be entitled to their benefits payments by May 25.
Administrators are using a computer programme to identify those eligible.
The second instalment, of £324, is due to be paid this autumn, but those on tax credits will have to wait longer, as the first payment will be in the autumn and the second instalment during the winter.
People may be receiving tax credits alongside other benefits that qualify for the payment, so some instalments are being made at a later date to avoid any double payments.
How will I receive the payments?
They will be paid automatically into bank accounts between November 8 and 23 – usually marked “DWP Cost of Living”.
Keep an eye out for ‘DWP XB’, which is the code that will be displayed on your bank statement.
Is there extra support for soaring energy bills?
Yes, every household will get a £400 energy bill discount in October.
For an average household, the price of energy increased from £1,277 to £1,971 in April amid soaring prices on wholesale markets.
And the price cap is set to rise by an extra £1,000 at the beginning of October to around £2,980.63 for the next period – which runs between October and December
Energy suppliers will automatically apply October’s £400 discount, so there is no need to apply.
The money will be credited to the accounts of customers who pay by direct debit, or with cash or a cheque. For those on pre-payment meters, the money will be applied to the meter or sent in vouchers.
What help is there for pensioners?
Some eight million pensioner households are set to receive an extra £300 to help cover the rising cost of energy this winter.
But low-income retirees are being urged to check if they’re entitled to a top-up benefit as thousands of households are missing out on key support.
The UK Government estimates around £1.7bn in Pension Credit goes unclaimed, with families potentially missing out on around £1,900.
The report estimated that 850,000 families didn’t claim Pension Credit in 2019/2020 – around three in ten.
That could also entitle you to help for NHS costs such as glasses and a free TV licence if you are over 75.
Pensioner households that receive the Winter Fuel Payment will get a top up of between £200 and £300 in November and December.
But those in receipt of Pension Credit are also entitled to a one-off £650 payment to help with energy bills.
It remains possible to get the whole £650 if you were signed up to pension credit by August 18, as you can ask for a pension credit claim to be backdated for up to three months.
If you are 66 or older and have total weekly income under roughly £200, then you are encouraged to go online at www.gov.uk/pensioncredit or call the Pension Credit helpline on 0800 99 1234 to see if you’re due.
What about those with disabilities?
People on disability benefits were eligible to receive £150 from September 20 if they are already claimed one of the following:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Scottish Disability Benefits
- Armed Forces Independence Payment
- Constant Attendance Allowance
- War Pension Mobility Supplement
How are the payments being funded?
The emergency cost-of-living package – including the energy bill discount – is being partly funded by a £5bn energy profits levy, or windfall tax, on oil and gas giants.
The tax runs until oil and gas prices return to normal levels or to December 2025.
Back in May, then-chancellor Rishi Sunak acknowledged that high inflation was causing “acute distress” for people in the country, telling MPs: “I know they are worried, I know people are struggling.”
He said the UK Government “will not sit idly by while there is a risk that some in our country might be set so far back they might never recover”.
Prime Minister Liz Truss says she’s against a windfall tax. But what she’s actually against is an additional or extended windfall tax as the UK Government already has such a tax in place, introduced by the previous administration in Downing Street.
Initially, the energy discount was designed to be a £200 reduction paid back in instalments over five years. Now, the discount has been doubled and there is no requirement to repay.
What is being done to curb inflation?
Annual inflation rate in the UK unexpectedly edged lower to 9.9% in August of 2022 from 10.1% in July, which was the highest reading since 1982.
The Bank of England has put up interest rates in a bid to tackle rising inflation. That means you’ll be paying more if you have a variable mortgage or if you have borrowings. But it could be good news if you’re a saver.
Last week, the Bank took action to calm the chaos in financial markets following turmoil for the pound and UK Government bonds caused by the Chancellor Kwasi Kwarteng’s tax-cutting mini-budget.
The Bank intervened to try to bring surging yields in government bonds – known as gilts – under control as they spiralled higher, sending UK public borrowing costs soaring.
It also made it clear that interest rates – currently at 2.55% – are likely to be hiked significantly when the Bank meets in November to rein in surging inflation.
Borrowing costs are, therefore, unlikely to come down anytime soon for households and businesses, with markets pricing in a rise close to 6% by next spring.