Millions of people who claim means-tested benefits will receive one-off payments worth £650 to help with rising bills, Chancellor Rishi Sunak revealed today.
The cash will be awarded to more than eight million households who receive benefits where your income and savings are taken into account to determine how much you get.
This includes Universal Credit, Pension Credit, Tax Credit and other means-tested payments where your earnings are measured - you can see a full list below.
In the autumn, pensioner households will get £300 one-off payment and disabled people will get a £150 payment.
Ministers had ruled out restoring the £20 Universal Credit uplift that was temporarily available during Covid.
Benefits usually rise annually in April along based on the inflation rate for the previous September.
Mr Sunak confirmed the extra help in the House of Commons this afternoon as part of a wider £15billion cost of living package, partly funded by a new windfall tax on energy firms.
The help could be vital for some families, after the boss of Ofgem warned energy bills are expected to be hiked by another £800 later this year.
The price cap for those on default tariffs paying by direct debit increased by £693 from £1,277 to £1,971 last month.
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Jonathan Brearley, the chief executive of Ofgem, said this could reach "in the region of £2.800" by October.
The price cap covers around 22million households and is linked to wholesale energy costs, which are going up due to global supply issues and the war in Ukraine.
Households are also feeling the pinch from record high petrol costs, more expensive food in the supermarkets and soaring inflation.
The UK rate of inflation has now hit 9% - a new 40-year high - as the cost of living continues to spiral.
Laura Suter, head of personal finance at AJ Bell, said the Chancellor has not gone far enough to protect the most vulnerable from rising bills.
She said: “Rishi Sunak’s bumper giveaway was far bigger than most expected, with an extra £400 for every household in the UK, £700 for pensioners and £1,050 for low-income households – on top of the £150 council tax giveaway that many have already received.
“The maximum benefit a household can claim is £1,650, which feels like a giant sum, and the lowest income households will get £1,170.
“However, to put that into context, between March and October this year average energy bills will rise by £1,523 – so for those households getting the largest handouts it still only leaves £100 spare to cover all the other cost of living increases.“
Cost of living payments explained
The £650 payments will be offered to households that are in receipt of means-tested benefits, with one payment to come in July and one in the autumn.
Payments from HMRC for those on tax credits only will follow shortly after each to avoid duplicate payments.
This means the amount you are entitled to can vary from one person to another, and even from month to month.
Here are the means-tested benefits that will qualify for the £650 one-off Cost of Living Payment:
- Universal Credit
- Income-based Jobseekers Allowance
- Income-related Employment and Support Allowance
- Income Support
- Working Tax Credit
- Child Tax Credit
- Pension Credit
Claimants will need to be in receipt of one of these benefits, or have begun a claim which is later successful, as of May 25, 2022 to be eligible for the first of the two instalments.
This payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards.
If you claim a contribution-based benefit, you won't be entitled to the £650 payment. The same goes for carers who only claim Carer's Allowance.
Pensioner households who receive the Winter Fuel Payment will receive a £300 Pensioner Cost of Living Payment.
This will be paid on top of any other one-off support a pensioner household is entitled to
All pensioner households will get the £300 as a top-up to their annual Winter Fuel Payment in November or December.
People across the UK who receive the following disability benefits will receive a £150 Disability Cost of Living Payment:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Scottish Disability Benefits
- Armed Forces Independence Payment
- Constant Attendance Allowance
- War Pension Mobility Supplement
Claimants must be in receipt of, or have begun an eventually successful claim for, one of these benefits as of May 25, 2022, to be eligible for this payment.
If you receive means tested benefits as well, this £150 will come on top of the separate £650 payment.
This payment is expected to arrive in September.
