Low-income households set to receive cash payments to help ease cost of living crisis

Millions of people are due to receive new government cash payments for low-income households to help them deal with the cost of living crisis in the UK.

The payments, which total £650, come as inflation has reached 9 per cent – its highest level in 40 years – and is forecast to climb higher still this year to 10 per cent.

Households are due to start receiving the first payment from July 14, with the second instalment due in the Autumn. 

The fund was announced by former chancellor Rishi Sunak in May. Sunak said: “We have a responsibility to protect those who are paying the highest price for rising inflation, and we are stepping up to help.”

The cost of living crisis has been exacerbated by a series of global crises, most notably the pandemic, during which time many companies either cut staff or went out of business altogether, and Russia’s war with Ukraine, which began the day Covid-19 restrictions lifted in the UK.

The war in Europe and subsequent sanctions on Russia, including a shift away from Russian oil imports, has driven up the price of oil. The average cost of filling a 55-litre family car has now passed £100 and energy prices are continuing to rise as much of the market is still reliant on fossil fuels.

Work and Pensions Secretary Thérèse Coffey said the government is “taking action to directly help families with the cost of living” and that the new payments are part of a £37 billion cost of living support package putting money “into the pockets of those most in need”.

Who is eligible for the cost of living payments?

More than eight million households are set to receive the two cost of living payments. All households receiving the following benefits are eligible for the cash sums:

• Universal Credit
• Income-based Jobseekers Allowance
• Income-related Employment and Support Allowance
• Income Support
• Working Tax Credit
• Child Tax Credit
• Pension Credit.

But to be eligible for the first instalment, claimants needed to be in receipt of one of these benefits, or have begun a claim which is later successful, as of May 25 2022, the government has said.

Couples who have a joint claim will only receive one £650 payment, government guidance states.

Below is everything you need to know about the new cost of living payments.

How much are the cost of living payments?

The government has said it will make cash payments totalling £650 in two instalments. The payments are tax-free and will not count towards the benefits cap or impact existing benefit awards.

On top of the £650 for low-income households, pensioners are also eligible to receive a one-off payment of £300 and disabled people are eligible for an additional £150.

When and where do I get the cost of living payments?

The first instalment of £326 will be paid out automatically to qualifying low income households in England, Wales, Scotland and Northern Ireland from 14 July this year. The second instalment of £324 will arrive in bank accounts in the Autumn. The payments are unequal to minimise fraud risks.

There is no need to apply for the payment – both instalments will be sent straight into bank accounts. The government has said payments will be sent “ad hoc” from July 14 and the “vast majority” of households should receive the money by the end of July, although this depends on how the rollout goes.

What should I do if my payment is delayed?

The advice is to wait if money doesn’t arrive in your account on July 14. There are currently no plans to hand out advance payments or other support to households waiting for the first instalment to arrive.

Households who are struggling to get by in the meantime should contact their local authority, who may be able to provide support 

Is this on top of the energy payments?

Yes, the cash payments are on top of the £400 one-off payments for all households to help with rising energy bills, as well as the extra £150 council tax rebate for properties in bands A-D.