Cost of Living Payments: Explained

Starting October 31, 2023, select UK households began to receive £300 cost of living payments. Here’s a detailed explanation of who can expect a second round of government support and when the money arrives in your bank account.

Cost of Living Payments

In the UK, more than eight million households on certain benefits and tax credits are eligible for receiving a £900 grant divided into three parts: £301, £300, and £299. The first part of the cost of living assistance has already been distributed to the people in need. As the second portion of the payout comes near, many questions arise.

What Are Cost of Living Payments?

Cost of living payments from the government of the UK are extra financial support designated to help vulnerable population strata deal with the rising cost of living. They are paid out by the Department for Work and Pensions (backed by HM Revenue and Customs and the Ministry of Defence).

One-off cost of living payments were first introduced in May 2022. In November 2022, a further package of Cost of Living Payments was announced for the 2023/24 financial year.

These payments are not taxable. They do not contribute towards the benefit cap. Neither do they affect the benefits or tax credits a person already receives. 

UK citizens do not have to separately apply for the cost of living payment. They receive it automatically in the bank account used for distributing other benefits and tax credits. At the same time, cost of living payments will be made separately from benefit payments.

There are three main categories of people who are entitled to cost of living payments: low-income households, pensioners, and people with disabilities. However, for different categories, the amount and terms of payment may differ.

The Amount of Cost of Living Payments

The additional cash benefits one can receive in 2023/2024 fiscal year equal to:

  • £900 in three instalments as a means-tested benefit Cost of Living Payments;
  • £150 Disability Cost of Living Payments;
  • £300 Pensioner Cost of Living Payments, paid in addition to the Winter Fuel Payment.

The payments are not mutually exclusive, so certain qualified households could get all three, depending on their circumstances. This way, some families may receive up to five total cost of living tranches. 

Cost of Income-Based Living Payment Eligibility

You may be entitled to the three instalments of Cost of Living Payments ( £301, £300 and £299) if you got any of the following benefits or tax credits on certain dates. 

£300 Payment

As we currently have the second payment due (£300), to receive one, you must have received one of the following benefit or tax credits between 18 August 2023 and 17 September 2023:

  • income-based Jobseeker’s Allowance (JSA);
  • income-related Employment and Support Allowance (ESA);
  • Income Support;
  • Pension Credit;
  • Universal Credit;
  • Child Tax Credit ONLY (without other added benefits);
  • Working Tax Credit ONLY (without other added benefits).

You are still eligible for the Cost of Living Payment of £300 if you were entitled to one of the abovementioned benefits for any day during the given period (or later found to be entitled to a payment) but you did not receive it because your entitlement was too low for a payout (between 1 penny and 9 pence).

£301 Payment

Those who were supposed to receive a £301 cost of living payment, must have already received it. To be eligible for one, households should have been entitled to the mentioned benefits and tax credits between 26 January 2023 and 25 February 2023.

£299 Payment 

The qualifying dates for the £299 Cost of Living Payment are yet unknown. 

Cost of Living Payments

Who Is NOT Eligible for Cost of Living Payments?

You are not entitled to receive a cost of living payment if you are only getting New Style ESA, contributory ESA, or New Style JSA.

If you are entitled to JSA, ESA, income support, pension or universal credit, child tax credit or working tax credit without additional benefits, you may still be not eligible to a cost of living payment in the following circumstances:

  • if your benefit is reduced to £0 for the qualifying period;
  • your tax credit entitlement for the tax year is below £26.

Your benefit may be reduced to £0 when:

  • you get more than one payment of earnings in your Universal Credit assessment period;
  • your or your partner’s earnings or savings went up;
  • you started getting another benefit;
  • you got a ‘sanction’ because you did not act as agreed in your claimant commitment.

At the same time, if your benefit is reduced to zero, but money was taken off your benefit for financial hardship reasons, e.g. payments of rent to your landlord, debt, inability to pay for rent, heating, food or hygiene needs, you will still be entitled to the cost of living payments.

Payment Dates for Income-Related Cost of Living Payments

The payout terms for the £900 financial support in three instalments are as follows:

£301 – Between 25 April and 17 May 2023 for those who receive benefits; between 2 May and 9 May 2023 for those entitled to tax credit;

£300 – Between 31 October and 19 November 2023 for those who receive benefits; between 10 November and 19 November 2023 for those on tax credit;

£299 – by spring 2024, no exact dates yet. 

Eligibility for Disability Cost of Living Payment

You may receive a Disability Cost of Living Payment of £150 if you’re receiving (either received or later receive) any of the following benefits for 1 April 2023:

  • Attendance Allowance
  • Constant Attendance Allowance
  • Disability Living Allowance for adults
  • Disability Living Allowance for children
  • Personal Independence Payment
  • Adult Disability Payment (in Scotland)
  • Child Disability Payment (in Scotland)
  • Armed Forces Independence Payment
  • War Pension Mobility Supplement

Most eligible people were paid the £150 Disability Cost of Living Payment automatically between 20 June 2023 and 4 July 2023. However, your payment might come later if you’re awarded a qualifying benefit at a later date or change the account your benefit is paid into. 

Cost of Living Payments

Pensioner Cost of Living Payment: Who’s Eligible?

Pensioners entitled to a Winter Fuel Payment for winter 2023 to 2024, born before 25 September 1957, can receive an extra £150 or £300 with their payment for November 2023. 

The full amount of the assistance depends on the birth year and one’s life circumstances during the qualifying dates, which have not yet been announced. 

If you’re eligible, you will receive a letter in October or November telling you how much Winter Fuel Payment you’ll get in total.

Scam Alert

Please note that the cost of living payments should be paid automatically. You do not need to make any applications. If someone contacts you with an offer to help you with an application for the cost of living payment, it may be a scammer. Watch out for scam texts or emails inviting you to claim or apply for the cost of living payment. 

If you’re entitled to a cost of living payment, but it is missing, contact only the official agencies. Check out this resource to discover more details about reporting the missing payment. 

Before reporting a missing payment, make sure to check your bank, building society or credit union account, or your Payment Exception Service voucher receipt. 

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.