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

Millions are set to benefit from new government cash payments for low-income households to help them deal with the growing 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.

Chancellor of the Exchequer Rishi 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 passed £100 last week 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”.

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

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.

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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.

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.