The cost of living crisis is affecting a large majority of people who live in the UK, with almost constantly rising interest rates, causing many households to struggle to pay their bills.
The cost of living payment offered by the government aims to help lower-income families with rising costs, but how can this payment help you if you’re eligible?
The experts at money.co.uk savings have compiled everything you need to know about the cost of living payments.
money.co.uk savings expert, Lucinda O’Brien, said: "The cost of living crisis in the UK has been an ongoing struggle for many households. Rising inflation, council tax rises, and increasing interest rates (which can add hundreds to mortgage costs) are taking their toll on the British public.
"The cost of living crisis has been particularly challenging for low-income families. Households already receiving benefits may have to choose between paying for their essentials, such as food and energy, and putting money aside for their futures.
"The UK government is taking measures to help low-income households manage these increasing costs through cost of living payments. These payments are made to households currently receiving benefits."
What is the cost of living crisis?
People in the UK have been facing a difficult cost of living crisis for the last few years as a result of global and domestic turmoil. Housing, energy, and food prices have all increased, and to combat rising inflation, interest rates have spiked, meaning mortgage payments have also risen dramatically. People are struggling to cover their essentials and as a result, it is increasingly difficult to save effectively.
How is the government intervening?
To help the lowest income families in the UK, the government has been delivering cost of living payments in addition to other benefits. The most recent of these is this year's £900 cost of living payment and the first instalment of £301 has started to be paid into people’s bank accounts as of 25 April 2023.
What cost of living payments can I get?
You do not need to apply for the cost of living payments - if you’re eligible, the money will be paid automatically in the same way you usually get benefit payments or tax credits. You may be eligible for the following payments:
£900 cost of living payment
£300 pensioner household payment
£150 additional disability benefit payment
Approximately eight million households are set to receive the £900 cost of living payment this year. This £900 is split into three instalments, and the first £301 has already started to be paid out to eligible households.
What is the £900 cost of living payment?
For the lowest income UK households, those on means-tested benefits, a £900 payment will be made to help cover their cost of living. This payment will be made in three instalments. The first £301 is being paid between April 25 and May 17. The second payment of £300 will be made in the autumn, and the final £299 will be paid in the spring next year.
The £900 is in addition to the £400 energy grant (paid in instalments between October 2022 and March 2023) and a previous £650 cost of living payment that most households will have already received (£326 paid in July 2022 and £324 paid in November 2022).
Am I eligible for a cost of living payment?
These payments are exempt from tax and do not count towards your benefit cap. Only those who have been receiving means-tested benefits between 26 January and 25 February 2023 will be eligible for the £900 payment. This includes anyone on:
Universal Credit
Tax credits
Pension credit
Income-based jobseekers allowance
Income-related employment and support allowance
Income support
Working tax credit
Child tax credit
HMRC urges households to ensure their financial information is correct and up to date when renewing their tax credits. Low-income pensioners are also encouraged to check their eligibility. Eligible pensioners can still qualify for and receive the first £301 cost of living payment if they apply before May 19.
Since the payments are automatic and you do not need to apply to receive them, the Department of Work and Pensions warns that if you are asked by anybody to apply for these payments, it could be a scam. You should not be asked by anyone to apply for these benefits.
How do I report missing cost of living payments?
If you think you are eligible for any cost of living payment but have not yet received it, you will need to report this to the Department for Work and Pensions.
Lucinda said: "The cost of living payments are intended to help pay for essentials such as food and utility bills. Households can take further steps to manage their finances such as switching to cheaper energy suppliers, shopping around for better deals on essentials and reducing unnecessary spending.
"To save money during the cost of living crisis, you need to take stock of your current finances and understand your spending habits, essential outgoings, and income. Set a realistic budget and be as detailed as possible about where you have money coming in and out. Once you have these details, it will be much easier to spot where you can make savings by cutting non-essential spending.
"To make sure you are accessing all the financial support you are entitled to, you can check your eligibility using the government's online benefits calculators. If you feel you have missed a payment you are eligible for, you can report this to the Department for Work and Pensions and make sure you have your national insurance number to hand.”
