When is the £400 energy allowance and other cost of living payments due?


By Kevin Peachey
Personal finance correspondent, BBC News

image source, Getty Images

Up to six million disabled people have started receiving cost of living payments worth £150.

This is the final part of the support package that was announced in May.

What is the disability payment?

  • Disability living allowance
  • Personal Independence Payment
  • Attendance support
  • Scottish Disability Payments
  • Armed Forces Independence Pay
  • Continuous Attendance Allowance
  • Supplementary Mobility of War Pensions

None of these cost of living payments affect the tax you pay, or any benefits or tax credits you receive.

Who receives other cost of living payments and when?

Two payments totaling £650 are being made to more than eight million low-income households, who receive the following benefits:

  • Universal Credit
  • income-based support for jobseekers
  • income-related Employment and Support Horiba
  • To guarantee income
  • working tax credit
  • child tax credit
  • pension credit

The first installment of £326 was paid to around seven million of these people between 14 and 31 July. Payments were automatically made into bank accounts, usually marked ‘DWP Living Cost’.

The 1.1 million people who only receive tax credits, more than any other benefit, had to wait longer.

The first payment was also automatic, paid directly to HM Revenue and Customs (HMRC) between 2 and 7 September. This was identified differently, with the letters CL and their National Insurance number.

Eight million will receive a second installment of £324 later in the year. The first group will receive the money in the fall, and the smallest group of 1.1 million in the winter. No exact date has been confirmed yet.

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Worried about energy bills? The BBC’s Colletta Smith tells you about four discounts and payments that might help in a minute

People will not be eligible for these payments if they receive New Style Employment and Support Allowance, Contributory Employment and Support Allowance or New Style Jobseeker’s Grant, unless they are getting Universal Credit.

Anyone who thinks they are entitled to assistance, but who has not received it by mid-September, should go to the office where they pay their benefit or tax credits.

Among those who could lose out are the 850,000 pensioner households the government says do not claim pension credit, which is the gateway to these extra payments.

How will the £400 energy rebate be paid for?

Every household in the UK will receive a subsidy that will reduce their energy bills by £400 from October.

This means that from October everyone’s energy bill will be reduced by £400. It will apply over six months, with a reduction of £66 in October and November, and £67 per month between December and March 2023.

The discount will be automatically applied by energy suppliers in England, Scotland and Wales. No need to apply.

Debit and credit customers will have money added to their account. Customers with prepaid meters will have the amount applied to their meter, or receive a voucher.

What extra help will pensioners get for their winter fuel bills?

Households receiving the Winter Fuel Payment – which is worth £200-£300 and is paid to almost all households with at least one person of pension age – will receive an extra £300 in November or December.

This should cover almost all pensioners in the UK.

Pensioners on lower incomes who claim Pension Credit will receive the money in addition to the £650 support for beneficiaries mentioned above.

This means that a small group of disabled pensioners will receive a total of £1,500 when all payments and discounts are combined.

image source, Getty Images

What else is the government doing to tackle energy prices?

In early September, Prime Minister Liz Truss announced plans to limit the 80% rise in household energy bills that was due in October when the latest energy cap came into effect.

Customers will still pay for the gas and electricity they use. But the government’s new Energy Price Guarantee will cap the price suppliers can charge per unit of energy.

For a typical household – using 12,000 kWh (kilowatt-hours) of gas and 2,900 kWh of electricity a year – it means an annual bill will not rise by more than £2,500 from October.

Without this intervention, that annual bill would have been £3,549 a year. Last winter it was £1,277 a year.

This guarantee will last for two years.

The government has pledged to give the same level of support to households in Northern Ireland, which have a separate energy market.

Also, the company must implement measures to protect against large increases in energy prices for six months.

What other payments have already been made?

Around 80% of households are already receiving the £150 energy rebate, often through their council tax bill.

How it’s paid depends on whether you pay your council tax by debit and where you live in the UK.

Some were given fuel vouchers through the Household Assistance Fund distributed by the Municipalities.

How is extra help funded?

The government has not yet said how much the new price guarantee will cost. However, industry research suggests the bill could be between £130bn and £150bn.

The government will borrow money to cover the cost,

Companies that extract oil and gas are making a lot more money than last year.

Companies that generate electricity may also be taxed more in the future.

That tax will cover some, but not all, of the government’s bill.

image source, EPA

Will the cost of living continue to rise?

Official forecasters say the rate will accelerate. Prices are not expected to fall next year, but the rate of increase is expected to slow.

The government’s energy plan offers two years of certainty for households, but only six months for businesses.

What happens to inflation in the long run depends largely on the war in Ukraine and its wider impact on energy supplies.