There are a number of major changes coming in August that will affect households across Scotland and the UK financially.
With the cost of living crisis continuing to worsen, families are struggling to pay their bills and put food on the table. This is only set to grow worse in the coming months when the energy price cap soars again in October.
In addition, food and fuel costs are also rising, as are TV and broadband packages.
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Fortunately, there are a number of positive changes set to come into effect in August too. These include cost of living payment deadlines and adjustments to mortgage affordability rules.
As reported by Birmingham Live, here are all the financial changes happening in August you need to know about.
1. Delayed £326 cost of living payment
While the majority of people who were eligible for the first £326 instalment of the £650 cost of living payment received their money in July, others will get the sum this month.
The DWP stated: "In a small minority of complex circumstances, claimants may be paid automatically after the end of July – for example, if they were deemed unable to claim certain benefits, but won backdated entitlement on appeal. The DWP will seek to contact claimants directly in the very small minority of cases where there are issues or delays."
2. Tax credits renewal last chance
HMRC encouraged approximately 222,000 tax credits customer to renew their claim before the July 31 deadline or risk losing crucial financial support. People who receive tax credits are among those who get the £650 cost of living payment.
However, if you were unable to do renew, this is still a chance to do so. Those who missed the cut-off will be sent a statement (TC607), and if you get in touch with HMRC within 30 days of the date written on the statement your tax credit claim will likely be reinstated.
If you contact HMRC after the 30-day window, you will be asked to explain the delay before considering whether to restore your claim. If your claim is reinstated, you will be told by HMRC how much you will receive within eight weeks.
If you fail to get in touch with HMRC at all, your tax credits payments will be halted and you will be required to repay all of the tax credits you have been given since April 6. Additionally, if your payments are stopped by HMRC, you are unable to make a new tax credit claim.
3. Tax credit payment changes
Tax credits, including Child Tax Credit and Working Tax Credit, are issued every week or every four weeks. They are managed by HMRC and are scheduled so as to not be paid on weekends.
However, in the case of bank holidays in the UK, payment dates can be shifted, and this is set to happen in August. Those scheduled a Tax Credit payment on Monday, August 29, will receive it on August 26 instead.
4. Pension Credit cost of living deadline
Those who receive Pension Credit are eligible for the £650 cost of living payment, so long as they qualified for the benefit April 26 and May 25. However, it may be possible to apply for Pension Credit now and still receive the full cost of living payment.
According to experts at EntitledTo, because of the fact that Pension Credit can be backdated for as much as three months, a new application for the benefit made before August 18 will mean that you could qualify retroactively for the first £326 sum. If you make a claim anytime after August 18, you will not get the first instalment, but will still receive the second payment of £324 later this year.
According to the DWP, claimants receive over £3,300 per year through Pension Credit. The benefit tops up income for pensioners to ensure that individuals get a minimum of £9,200 per year and couples receive at least £14,055.
5. Mortgage affordability rule change
As of August 1, an affordability test for those wanting a mortgage was scrapped. As a result, people may be permitted to borrow more money in order to purchase a house.
Before the change, prospective buyers were required to prove that they could pay a rate three percentage points higher than the reversion rate. Anyone applying for a fixed rate mortgage gets a set interest rate for a period of time and when that is up, they're switched to what's called the reversion rate.
In simple terms, this is the higher interest rate that your mortgage reverts to after your fixed rate mortgage period comes to an end. Much like a variable mortgage rate, it's normally based on a benchmark rate plus a percentage added by the bank.
Until now, banks had to check if you'd be able to afford the higher mortgage payments when the fixed rate ended. But this affordability test for home loan lending is being dropped by the Bank of England from the start of August.
A second rule, which limits the number of mortgages that can be given at 4.5 times a borrower's income or more, is remaining in place.
6. Universal Credit cuts for holidays
Universal Credit claimants who left the UK for a holiday earlier this summer may be negatively impacted. It is possible for your payments to be halted if you are on an unauthorised international trip, with the DWP lowering your entitlement to zero.
According to DWP rules, you are expected to continue job hunting whilst on holiday, and if offered work or an interview you may be forced to fly home.
7. Energy price cap review
Ofgem is set to reveal the new price cap for October on August 26. This will determine how much households are required to pay in energy bills for the remainder of the year.
Energy experts at BFY have forecast the price cap to hit £3,420 in October, while Cornwall Insight has warned of an even higher cap of £3,500. It will then rise again in January.
8. DWP bank holiday benefit changes
Due to a bank holiday on Monday, August 29, anybody due benefits on that day will instead get their money on the previous Friday instead.
The majority of payments are scheduled so that they are not issued on a weekend, but some are designed to be paid on a specific date every month rather than a day. Universal Credit claimants get their money on the same date each month, which is determined by the date they received their first payment.
Meanwhile, child benefit is normally issued every fours weeks on either a Monday or a Tuesday. However, single parents and those who claim other benefits can get it paid weekly instead. If this is the case, and your payment is due August 29, you will get the money August 26 instead.
It is the same for State Pension claimants, who receive their money every four weeks.
9. Universal Credit advance payment boost
For anybody making a new Universal Credit claim, there is usually a five-week wait before the first payment is made. However, if you apply for the benefit now, you may get an advance payment to help while you wait — though it will have to be paid back.
Additionally, people already claiming Universal Credit or any other benefit can apply for up to £812 in emergency funds.
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