Cost of Living Changes August 2022
Inflation has soared above 9% in the UK – the highest in more than 40 years. While the energy price cap increase is expected to send annual household energy bills up to £4,000 for the average household.
On Thursday the Bank of England announced that it was raising interest rates to 1.75% from 1.25% – the highest level since January 2009. It has been confirmed that the UK is facing the worst recession since the financial crisis with inflation likely to hit 13% later this year.
There are six changes and new rules coming into force this month which may have an impact on your finances.
From changes to universal credit payment dates to deadlines for pension credit, here’s everything you need to know about how your finances could be affected by the Cost of Living Changes August 2022.
Delayed £326 payment
The first instalment of the UK government’s £650 cost of living payment between July 14 and 31 has hit millions of UK household bank accounts. However, some people have had their payments delayed, according to the DWP. It said at the time: “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.”
Tax credits deadline
HMRC previously urged tax credit customers to renew their claims before the July 31 deadline to avoid missing out on future claims or having to pay back their tax credit claims. This deadline has now passed but anyone who has missed it is being asked to contact HMRC within 30 days of the date on the statement they’ve been given, as they may still avoid missing out.
If you contact HMRC after 30 days, they will ask you to explain the reasons for the delay before they consider restoring your claim. If your claim is restored, HMRC will tell you how much you’ll get within eight weeks of receiving your renewal.
Affordability tests scrapped
The Bank of England have scrapped affordability tests for mortgage borrowers from Monday, August 1st.
Under the previous rules, mortgage borrowers had to prove they would be able to continue paying their loans if interest rates increased. The ‘stress test’ forced lenders to calculate whether potential borrowers would be able to cope if interest rates climbed by three percentage points above the loan reversion rate (the rate that applies when your fixed deal ends). However, this has now been scrapped.
New energy price cap announced
The energy price cap soared by £693 – 54% – in April, leading to many struggling to cope with their monthly bills. Ofgem is now reviewing the cap every three months, and BFY Group, a utility consultancy, said it expects the cap on bills to hit £3,850 between January and April next year – hundreds of pounds more than prior predictions. The next price cap, which comes into effect in October, will be announced on August 26.
Universal credit payment changes
Payment dates for the round of universal credit due at the end of August have been changed thanks to the Bank Holiday. Claimants will see their payments arriving up to three days early, so if you are due to be paid on August 29 you will actually get the money in your account on August 26.
The changes cover not just universal credit, but also the state pension, ESA, JSA, carers’ allowance, pension credit, PIP and attendance allowance.
Pension credit deadline
£650 cost of living payment from the government, for people on pension credit will have received it as long as they were entitled to the benefit between April 26 and May 25. But there is a way to put in a claim for pension credit now and still get access to that payment.
Independent advisers at EntitledTo say that because pension credit can be backdated for three months, a new application for that benefit until August 18 will mean you end up being eligible for the £326 cost of living sum as well as the second part of £324. So you’ll get the full £650 that’s on offer.
We understand and believe that if you apply for pension credit after 18th August you’ll miss out on the £326 but should be in line for the next instalment of £324 later this year. This date is determined by the fact that pension credit payments are split into benefit weeks, and you need to be eligible for the full seven-day period to receive that week’s payment.
If you have any questions or would like to check your eligibility for a scheme, please contact the Robinsons Team