A complete guide to Cost of Living Payments – are you eligible?

13 min Read Published: 08 Sep 2022

A complete guide to Cost of Living Payments - are you eligible?

A large majority of households in the UK are affected by the current cost of living crisis as a result of an increase in inflation, soaring energy prices and high petrol costs. In a bid to tackle the cost of living crisis Rishi Sunak, the former chancellor of the exchequer announced a cost of living support package earlier in the year. One of the schemes announced was the Energy Support scheme which includes an energy bill discount and a Cost of Living payment for those on low incomes.

In this guide, we explain what help is available within the Cost of Living support package including who is eligible and when the support is paid. We also look at additional grants and schemes that can help you to save money as well as share additional money-saving tips to help your money go further. For more tips on how to save money and cut your household bills, read our article 'How to save money on your household bills'.

We recommend that you read this guide in full, but you can jump to specific sections of the article using the following links:

What is the Cost of Living Payment?

The government announced a Cost of Living Support package which is designed to help those eligible with the continued rise in household and living costs. Those receiving certain benefits may be eligible for the Cost of Living Payments which will usually be paid the same way in which the benefits are received. Any Cost of Living support payments that you receive are not subject to tax and will not affect any benefits you get. If you are unsure if you are entitled to any benefits, you can check your eligibility using the following online tool.

There are three different types of Cost of Living Payments:

  • Cost of Living Payment - for those that receive a low-income benefit or tax credits
  • Pensioner Cost of Living Payment - for those that are eligible for the Winter Fuel Payment in 2022/23
  • Disability Cost of Living Payment - for those that receive a qualifying disability benefit e.g Disability Living Allowance

A summary of the Cost of Living Payments can be found in the below graphic but we go into more detail below:

Energy support table

(click to enlarge the image)

Cost of Living Payment

The Cost of Living Payment is a £650 payment that is paid to those on eligible benefits. The sum will be paid across two amounts of £326 and £324. To be eligible for the Cost of Living payment you will need to have been in receipt of a qualifying benefit payment between 26th April 2022 and 25th May 2022. You could also be eligible if you were under assessment during this time and later found to be eligible for a qualifying benefit payment.

Who is eligible for the Cost of Living Payment?

Eligible Cost of Living payment benefits are as follows:

  • Universal Credit
  • Income-related Jobseeker's Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Income Support
  • Pension Credit
  • Working Tax Credit
  • Child Tax Credit

When will the Cost of Living Payment get paid?

The following table shows when you can expect to receive the Cost of Living Payment. This is paid automatically if you are eligible and you do not need to apply. You should have already received the first instalment of the Cost of Living Payment if you are eligible unless you receive Tax Credits where you will receive your first payment in September 2022. If you believe that you should have been paid a Cost of Living Payment but have not received it, you can report a missing payment on the government's website.

Benefit/Tax credit  Cost of Living Payment amount  Payment date 
Universal Credit £326 Between 12 - 31st July 2022
£324 Autumn 2022
Income-based JSA £326 Between 12 - 31st July 2022
£324 Autumn 2022
Income-based ESA £326 Between 12 - 31st July 2022
£324 Autumn 2022
Income Support £326 Between 12 - 31st July 2022
£324 Autumn 2022
Pension Credit £326 Between 12 - 31st July 2022
£324 Autumn 2022
Tax Credits £326 September 2022
£324 Winter 2022

(Source gov.uk)

Pensioner Cost of Living Payment

The Pensioner Cost of Living Payment is an amount up to £300 which is paid in addition to the Winter Fuel Payment that eligible pensioners will receive in November or December 2022. How much you will receive depends on numerous factors which we will cover below. If you receive any benefits or tax credits you will also receive a Cost of Living Payment and this will be paid to you automatically. You should have already received the first half of the Cost of Living Payment in July 2022.

Who is eligible for the Pensioner Cost of Living Payment?

You will only receive the Pensioner Cost of Living Payment if you are eligible for the Winter Fuel Payment.

Eligibility for the Winter Fuel Payment is as follows:

  • You were born on or before 25th September 1956
  • You will be living in the UK for at least 1 day during the 'qualifying week' which is between 19th - 25th September 2022

You do not qualify for the Winter Fuel Payment if any of the following applies:

  • You are in hospital for more than a year getting free treatment
  • You are in prison for the full 'qualifying week' of 19th - 25th September 2022
  • You have lived in a care home from 27th June 2022 and will still be in the care home until at least 25th September 2022 and received certain benefits including Pension Credit or Income Support

How much is the Pensioner Cost of Living Payment?

How much you will be paid for the Pensioner Cost of Living Payment will vary depending on your circumstances and you will receive a letter that details how much you will get. In the following table, we highlight how much you can expect to be paid. The following amounts include the total cost of the Pensioner Cost of Living Payment and the Winter Fuel Payment.

Your circumstances  Born between 26/09/42 - 25/09/56 Born on or before 25/09/42
You qualify and live alone (or none of the people you live with qualify) £500 £600
You qualify and live with someone under 80 who also qualifies £250 £350
You qualify and live with someone 80 or over who also qualifies £250 £300
You qualify and live with a partner who qualifies, and either of you gets certain benefits* £500 (only one person will get the payment) £600 (only one person will get the payment)
You qualify and live with someone (not your partner) who qualifies, and either of you gets certain benefits* £500 (you both get a payment) £600 (you both get a payment)
You qualify, live in a care home and do not get certain benefits* £250 £300

(Source gov.uk)

*Pension Credit, income-based Jobseeker's Allowance (JSA), income-related Employment and Support Allowance (ESA), Income Support

When will the Pensioner Cost of Living Payment get paid?

The Pensioner Cost of Living Payment will be paid in November/December 2022 in addition to the Winter Fuel Payment. If you are expecting to receive a payment but do not get a letter or the money is not paid into your account by 13th January 2023 you can contact the Winter Fuel Payment Centre.

Disability Cost of Living Payment

If you are living with disabilities you may be entitled to a £150 lump sum payment if you receive an eligible benefit.

Who is eligible for the Disability Cost of Living Payment?

If you received one of the following benefits for 25th May 2022 you may be eligible for the Disability Cost of Living Payment. If you are later found to be eligible for the following benefits for 25th May 2022 you are also entitled to the Disability Cost of Living Payment.

Disability Cost of Living Payment eligible benefits:

  • 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

When will the Disability Cost of Living Payment get paid?

The £150 Disability Cost of Living Payment will be paid from 20th September 2022 over the course of a few weeks. More information can be found in our article, '£150 disability Cost of Living Payment date announced'.

Additional support for the rising cost of living

If you find you are still struggling with the cost of living there may be additional grants and schemes that you are eligible for. We list some of the additional help that is available below. You may also find our article, 'How to save money on household bills' useful or alternatively you can listen to Episode 354 of the Money to the Masses podcast which is a money saving special.

Government Energy Price Guarantee

The government has announced an energy price cap freeze which will see the average household's energy bill capped at £2,500 for up to 2 years. The government's intervention is in response to Ofgem's announcement that the energy price cap will increase by 80% to £3,549 from 1st October 2022. Those living off-grid and businesses can also expect to receive help towards the rising cost of energy.

Further information on the Energy Price Guarantee and how it works can be found in our articles, 'Energy price cap to be frozen at £2,500 for up to two years: What does it mean for you?' and 'Energy Price Guarantee unit rates confirmed – what does this mean for you?'

Energy Bill Support Scheme

Every domestic household in the UK is eligible for a £400 energy bill discount from October 2022. The discount will be paid automatically and will be paid via each household's energy supplier. The discount will be paid over a series of 6 payments. £66 will be discounted on to household energy bills in October and November, and a further £67 will be paid each month from December to March 2023. If you find that you are still struggling to pay your energy bill you should contact your provider to agree on a payment plan that you can afford. For more information on the help available if you are struggling to pay your energy bills, read our article 'Rising energy costs: What help is available and do you qualify?'.

How will the Energy Bill Support Scheme be paid?

  • If you are a direct debit customer the amount will be paid automatically as a reduction to the monthly amount that is usually paid via direct debit. Therefore if your usual monthly direct debit amount is £150 only £84 will be taken in October and November and £83 will be paid from December through to March 2023. If your monthly direct debit has already been taken then the amount will be added to your energy account as a refund each month.
  • If you are a standard credit or payment card customer the discount will be automatically applied to your account.
  • If you are a smart prepayment meter customer the discount will be automatically credited to your smart prepayment meter.
  • If you are a traditional prepayment meter customer you will receive a redeemable voucher or Special Action Messages (SAMs) which you will then have to redeem where you usually top up your energy meter.

Energy bill grants and schemes

There are a number of grants and schemes that may be able to help with your energy bills. We briefly summarise what you could be entitled to below, but for a full breakdown, read our article 'Grants and schemes for help with your energy bills'.

Cold Weather Payment

If you receive one of the following benefits you may be eligible for a Cold Weather Payment; Pension Credit, Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Universal Credit and Support for Mortgage Interest. A Cold Weather Payment is a £25 sum for each consecutive 7 day period of very cold weather (0°C or below) between 1st November and 31st March and is paid into the same bank account that you have your benefits paid into. Cold Weather Payments will be paid automatically if you are eligible and the scheme will start from 1st November 2022.

Warm Home Discount

If you are a low-income household you may be entitled to a £150 discount on your energy bills. This is a one-off payment that is paid to your electricity bill between October and March. The scheme re-opens in November 2022.

Help to Heat

The government has invested £12 billion into Help to Heat schemes that can help to make homes more energy efficient and therefore warmer and cheaper to heat. The funding is provided by the government but is delivered by local installers or energy companies. Some examples of the schemes include the Boiler Upgrade Scheme, the Home Upgrade Grant and the Social Housing Decarbonisation Fund.

Household Support Fund

If you are in need of additional help due to rising living costs you may be entitled to additional help from your local council, which is funded by the government. Exactly what you are able to access and are eligible for does vary between councils so you will need to check with your local council to see what help you can get access to. The fund may include help towards food and home essentials, school uniforms and water and housing costs.

Budgeting loans

If you have been on one or more of the following benefits for at least 6 months you may be eligible for an interest-free budgeting loan. An eligible benefit includes Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance and Pension Credit. A budgeting loan can help you to pay for numerous purchases that are not limited to but include furniture or household items, clothes or footwear, maternity costs, rent in advance and home maintenance. The lowest amount that you can borrow is £100 and the maximum you could borrow is £348 if you are single, £464 if you have a partner and £812 if you or your partner claim Child Benefit. How much you can get also depends on your ability to pay the loan back, how much you have in your savings and if you are paying back an existing Budgeting or Crisis Loan.

The interest-free budgeting loan has to be paid back within 2 years and is usually deducted via your benefits. For more information on budgeting loans and how to apply visit the government's website.

Social tariffs for broadband and mobile

If you receive eligible benefits you may be able to choose from a range of social tariffs with select broadband providers. For more information on the social tariffs available and if you are eligible, read our article '4 million households could save up to £144 a year on broadband'.

Help for Households

The government has a 'Help for Households' campaign that is designed to help with the rising cost of energy bills and inflation. The campaign has been set up to provide households access to discounted rates and benefits throughout the school holidays and into the start of the new school term in September. Numerous businesses have pledged to join the campaign to offer discounts and deals to customers and it is expected that more deals will be added in the Autumn and in the lead up to Christmas. For more information on the scheme, read our article 'What is the Help for Households campaign and who does it help?' For a full list of the businesses included in the campaign, click here.

Help with rising food costs

As the cost of food continues to rise, you can take advantage of schemes and apps that help you cut down on your food costs. One of these schemes is Iceland's Food Club. Iceland's Food Club is part of Iceland's 'Doing it Right' initiative to help combat food poverty. The supermarket has teamed up with not-for-profit lender Fair for You to offer interest-free loans to customers who are struggling to pay for their food bills. More information on Iceland's Food Club and how it works can be found in our article, 'Iceland offering “ethical” loans up to £75 to cover food costs: How does it work?'

Additional money saving tips

With household bills continuing to rise and many households throughout the UK feeling the squeeze, we share some of our top money saving tips to help you make your money go further.

Save money on your food bills

There are a number of apps that can help you to save money on your food shop. Find out more in our article '5 apps to save money on your food bills'. In addition, you can benefit from discounted items and loyalty points when doing your food shop if you sign up for a supermarket loyalty scheme. Read our article, 'Which is the best supermarket loyalty card?' for more information.

Switch current bank accounts

Switching current accounts could see you benefit from a cash lump sum just for making the switch. Switches usually need to be via the Current Account Switching Service (CASS) and will need to be completed within a set timeframe for you to be eligible. We round up some of the best offers in our article, 'Best current account switching offers, cashback and incentives'.

Create a budget

Budgeting your money can help show where your money is going each month and identify any potential areas within your finances where you could save. We have a FREE budgeting spreadsheet that you can download or alternatively, you may wish to use a budgeting app.

Save as you spend

Some of the budgeting apps can also help you to save as you spend with 'round up spending'. Round-up spending saves the spare change from your transactions and helps you to easily save towards a goal. For example, if you spend £1.30 at a shop, the transaction will be rounded up to the nearest £1 which means that £0.70 will be saved in your selected savings pot. More information on round-up spending can be found in our article, 'The best savings apps in the UK'.

Find unwanted subscriptions

Another way to save money is to find any unwanted subscriptions that you may unknowingly be paying for each month. Budgeting apps such as Emma, can help to highlight any wasteful subscriptions and cancelling these can be an easy way to save cash each month. Read our article for more information on how to cancel unwanted subscriptions.

How to save money on your energy bills

With the cost of energy bills on the rise, we share some energy-saving tips below that can help to reduce the amount of energy you use around the home:

  1. Use energy-saving light bulbs
  2. Get energy-efficient appliances
  3. Switch off appliances on standby 
  4. Wash clothes at 30°C 
  5. Use the eco setting on the dishwasher 
  6. Only boil the water you need in the kettle
  7. Turn off radiators in rooms that you're not using
  8. Have a smart meter to understand how much energy you are using

How to save money on your water bills

Below are a few tips that can help you save water around your home and help to reduce the cost of your water bill:

  1. Identify and repair any leaks around your home 
  2. Turn the tap off when brushing your teeth
  3. Try to shower instead of having a bath
  4. Shower with a bucket to collect water which can then be used to water your garden
  5. Ensure the washing machine and dishwasher are full before using (this will also help save energy) 
  6. Install a water butt instead of using the hose
  7. Install a water saving device into the cistern of your toilet 
  8. Use a washing up bowl instead of running water when washing your dishes. You could also use this to collect any water when washing fruit and veg and use the leftover water on your plants 

Where to get free debt advice

If you find that the cost of living is becoming overwhelming and you are struggling to stay on top of your finances you should seek help with your debts. There are a number of companies and charities that offer free debt help and advice. Read our article to find out where you can seek free debt advice. With numerous government schemes available it can also make us more vulnerable to scammers, particularly when finances become tight. Always remain alert for new scams and find out how to avoid falling victim in our guide.