The Cost of Living Support Scheme has been announced by Rishi Sunak. The cost of living in the UK has risen dramatically recently with millions of households struggling to make their incomes stretch to cover basic bills. The Chancellor made an announcement on 26th May detailing the Cost of Living Support Scheme – emergency measures the government are taking to assist with the soaring cost of living and the impact of inflation.
The measures are part of a £15billion package is in addition to the £22billion announced previously, with the Cost of Living Support Scheme this year totalling £37billion
Most notably, millions of households will receive a £400 discount off their energy bills and a £5billion tax will be levied on oil and gas giants.
In addition, there is targeted support for the poorest, elderly & disabled.
We take a look at what these measures mean for you and explore eligibility for each Cost of Living Support Scheme. Speak to the Robinsons team if you would like to discuss your eligibility and how to claim.
£400 ENERGY BILLS SUPPORT SCHEME
As part of the cost of living package, the ‘Energy Bills Support Scheme’, will give all households £400 of support with their energy bills. This replaces the initial plan for a £200 loan, with Rishi Sunak also scrapping the requirement to repay.
How is it paid?
This support will come via energy suppliers to households with a domestic electricity meter over six months from October.
Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher.
Worth noting, the Government said that this support was in addition to the £150 council tax rebate for households in England in council tax bands A to D, which was announced in February.
EXTRA £500MILLION FOR COUNCILS
Household Support Fund
The Government is providing an extra £500 million of local support, via the Household Support Fund – extended from this October to March 2023.
This is intended to help those in most need with payments towards the rising cost of energy, food and water.
Eligibility will be determined by individual councils. The Household Support Fund is administered by local councils in England and the Government said that further information will be available directly from them.
£650 FOR THE VULNERABLE
Cost of Living Payment
Households on means tested benefits will receive a payment of £650 this year, made in two instalments.
This includes all households receiving
- Universal credit
- Income-based jobseekers allowance
- Income-related employment and support allowance
- Income support
- Working tax credit
- Child tax credit
- Pension credit.
to be eligible for the first of the two instalments – The Government said 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.
How is it paid?
The Government will make these payments directly to households across the UK.
The Department for Work and Pensions (DWP) will make the payment in two lump sums – the first from July, the second in the autumn. Payments from HM Revenue and Customs (HMRC) for those on tax credits only will ‘follow shortly after each to avoid duplicate payments’.
This payment will be:
- Will not count towards the benefit cap
- Will not have an impact on existing benefit awards.
£300 FOR PENSIONERS
Pensioner Cost of Living Payment
Pensioner households will receive an extra £300 this year under the ‘Pensioner Cost of Living Payment’ to help them cover the rising cost of energy this winter.
This additional one-off payment will go to those households in the UK thay receive the Winter Fuel Payment. This scheme currently pays out between £200 and £300 to eligible people.
The cash will also be paid on top of any other one-off support a pensioner household is entitled to, such as where they are on pension credit or receive disability benefits.
The Winter Fuel Payment and the Pensioner Cost of Living Payment are both not taxable and do not affect eligibility for other benefits.
How is it paid?
All pensioner households will get the one-off Pensioner Cost of Living Payment as a top-up to their annual Winter Fuel Payment in November or December. For most pensioner households, this will be paid by direct debit.
People will be eligible for this payment if they are over State Pension age (aged 66 or above) between September 19 and 25 this year. The Government will make these payments directly to households across the UK.
£150 DISABILITY PAYMENT
Disability Cost of Living Payment
Around six million people across the UK who receive a disability benefit will receive a one-off payment of £150 in September.
Benefits required to claim the payment include:
- the Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Scottish Disability Benefits
- Armed Forces Independence Payment
- Constant Attendance Allowance
- The War Pension Mobility Supplement.
The Government said this payment was in response to the fact that people with disabilities
‘may face a wide range of additional costs, such as specialist equipment, specialist food, and increased transport costs, and this payment will help with these costs as they are likely to have increased’.
The guidance states that claimants must be in receipt of, or have begun an eventually successful claim for, one of these benefits as of yesterday – May 25, 2022 – to be eligible for this additional payment.
How is it paid?
For the disability benefit recipients who receive means tested benefits, this £150 will come in September on top of the £650 they will receive separately.
These payments will be exempt from tax, will not count towards the benefit cap, and will not have any impact on existing benefit awards. The Government will make these payments directly to eligible people across the UK.
How do these policies apply to my circumstances?
The Government has provided 5x illustrative case studies to help everyone better understand how the Cost of Living Support Scheme applies in different circumstances:
‘Low-income household with two children
Combined gross annual earnings of £26,000, including a full-time earner on £10/hour and a part time earner on the National Living Wage with two children who are in receipt of means tested benefits should expect to receive additional government support of £3,200 this year.
This includes £850 from today’s measures, £350 from the February package, £2,000 from the Universal Credit taper reduction.
A low-income couple, both out of work, one of whom has a disability (combined net income of £13,900) will receive a total of £1,350 this year in additional support. This includes £1,000 from today’s measures, and £350 from the February support package.
A low-income pensioner household will receive a total of £1,500 this year in additional support. This includes £1,150 from today’s announcement and £350 from the February support package.
A single mother of two children who works full time on the National Living Wage will receive a total of £2,500 this year in additional support. This includes £850 from today’s measures, £350 from the February package, £1,200 from the UC taper reduction.
Low-to-middle income working family
A low-to-middle income working family on Universal Credit, with 2 children (combined gross annual earnings of £43k, including a fulltime earner on median hourly wage of £14.10/hour, or around £27,000 per year, and another full time earner on the National Living Wage) will receive £4,200 this year in additional support. This includes £850 from today’s measures, £350 from the February package, £240 from the NICs threshold increase, £2,900 from the Universal Credit taper reduction.’