Who's eligible for £650 cost of living payments and how can they be claimed?

Families have told ITV News that cost of living payments from the government are not enough to cover even one month's worth of energy bills, reports Sejal Karia.

More than a million households on Tax Credits will start to receive the first of two cost of living payments from Friday.

The first instalment of £326 will be paid between 2 and 7 September 2022 and the second payment of £324 will be paid in the winter.

Those who receive other benefits, including Universal Credit and Pension Credit, received the first of their cost of living payments in July.

The government announced the new scheme to lessen the burden of the cost of living crisis, as soaring energy bills - coupled with rising prices in supermarkets and shops - continue to put pressure on people, with figures showing more and more people are buying less food to get by.

Here is what you need to know about the support on offer.

Who is eligible?

People may be entitled to receive the £650 in two lump sums if they are from low-income households on benefits or receive certain support, such as:

  • Universal Credit

  • Income-based Jobseeker’s Allowance (JSA)

  • Income-related Employment and Support Allowance (ESA)

  • Income Support

  • Pension Credit

  • Child Tax Credit

  • Working Tax Credit

What do I need to do to claim the money?

Those eligible will be paid automatically, so they do not need to apply and payments may appear in accounts as “DWP Cost of Living.”

The payments will be made from Thursday. Credit: PA

The Department for Work and Pensions (DWP) and HM Revenue and Customs (HMRC) have been identifying those eligible to receive a cost-of-living payment.

When will the payments be made?

Some 1.1 million people who claim Tax Credits will receive the first instalment of £326 between 2 and 7 September 2022, while the second payment of £324 will follow in the winter.

To receive the cost of living support you must have been eligible for a Tax Credits payment between 26 April 2022 and 25 May 2022, or later found to be eligible.

If you get both Child Tax Credit and Working Tax Credit, you will receive a cost of living payment for Child Tax Credit only.

Those who receive Universal Credit, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support, and Pension credit received the first instalment of £326 between July 14 and 31, while the second payment of £324 will follow in the autumn.

Is there any other help?

Pensioner households will also receive an extra £300 to help cover the rising cost of energy this winter, while people on disability benefits will receive an extra £150 payment in September.

From October, households will have £400 taken off energy bills.

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People may also see an income boost in their pay packets this month, as national insurance (NI) starting thresholds increased from £9,880 to £12,570 from July 6.

However, this was after a 1.25 percentage point increase in NI in April, to help pay for health and social care.

But won’t energy bills get worse?

Households have been warned to expect to see energy bills soar further in the coming months.

The energy price cap was increased to £3,549 from October 1 - a rise of 80% from the previous cap of £1,971.

The change means that householders on a typical default tariff will pay an extra £1,578 a year for their gas and electricity.

Some 4.5 million pre-payment meter customers - who are often the most vulnerable and already in fuel poverty - will see an even more punishing increase, with their average annual bill set to go up to £3,608.

Energy bills are expected to rise further. Credit: PA

According to Office for National Statistics (ONS) figures covering adults in Britain between late June and early July, around nine in 10 (91%) said their living costs had increased over the previous month.

Around half (49%) of people reported that they were buying less food when food shopping and 48% said they had to spend more than usual to get what they normally buy.

The vast majority of those surveyed had taken at least one action to save energy in the past year.

A ‘vital step’ but ‘not enough’

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the cost-of living payments are “a vital step in the right direction for those on lower incomes.”

But she added: “It’s not enough to put people back where they were before price hikes.”

The Office for Budget Responsibility (OBR) said that geopolitical tensions, soaring energy costs and long-term pressure on the nation’s finances from an ageing population “add up to a challenging outlook for this and future governments as they steer the public finances through inevitable future shocks.”

The OBR said: “Many threats remain, with rising inflation potentially tipping the economy into recession, continued uncertainty about our future trading relationship with the EU, a resurgence in Covid cases, a changing global climate, and rising interest rates all continuing to hang over the fiscal outlook.”

People can find out more information about cost of living support at costoflivingsupport.campaign.gov.uk.