Cost of living payments: When is the £326 due and which households qualify?

14 July 2022, 11:04 | Updated: 19 July 2022, 06:49

More than eight million households will start receiving direct payments to ease cost-of-living pressures from Thursday.

A first instalment of £326 will start to be paid out to low-income households on benefits, with a second payment of £324 following in the autumn.

Here’s what you need to know:

Who is receiving the money?

People may be entitled to receive the £650 in two lump sums if they 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 or Working Tax Credit.

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.

Do I need to apply?

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

When will I receive it?

Many people will receive the first instalment between July 14 and 31, although for those receiving Tax Credits, the first payment is to be made from the autumn and the second from winter 2022.

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'The £326 landing in bank accounts today will be welcome'

What other support will people be receiving?

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

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

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 backlogs in health and social care.

Cost of living

According to recent 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.

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Energy prices to soar further

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

Experts at Cornwall Insight said bills could rise from a current record of £1,971, to £3,245 in October and then further to £3,364 at the start of next year.

The forecasts are based on what an average household will spend on gas and electricity in a year.

Why is this happening?

The Office for Budget Responsibility (OBR) said last week 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.