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UK Government Announces New Cost of Living Support for Low-Income Households

New Initiative Commencing in 2023

In a significant move to alleviate economic hardship, the UK Government is set to deliver up to £1,350 to millions of low-income households in the financial year 2023/4. This remarkable effort, beginning in Spring 2023, is designed to counter the escalating cost of living.

Direct Benefits to Households

The Department for Work and Pensions (DWP) has elaborated that the £900 Cost of Living Payment will be deposited directly into the bank accounts of eligible recipients.

These funds will be divided into three installments over the fiscal year, providing consistent support to those claimants of means-tested benefits including Universal Credit, Pension Credit, and tax credits.

Extra Support for Disabled and Elderly Individuals

In this broad-based initiative, disabled individuals and pensioners will not be left out. Over six million disabled persons will be awarded an additional £150, while more than eight million pensioners will receive an extra £300, supplementing their Winter Fuel Payments.

Breakdown of the Payment Schedule

The DWP is yet to announce the exact timeline of payments, but the anticipated schedule is as follows:

  • Spring 2023: £301 – First Cost of Living Payment
  • Summer 2023: £150 – Disability Payment
  • Autumn 2023: £300 – Second Cost of Living Payment
  • Winter 2023/4: £300 – Pensioner Payment
  • Spring 2024: £299 – Third Cost of Living Payment

Simplified Process for Beneficiaries

The payments will be issued automatically, sparing eligible beneficiaries the need for application. Tax credit recipients, with no other means-tested benefits, can expect their payments shortly after they are issued by the DWP.

Building Upon Prior Government Support

This new initiative expands the Government’s previous endeavours to battle the worldwide rising cost of living, triggered by the pandemic and the conflict in Ukraine.

The Government’s Energy Price Guarantee continues to cap energy costs, expected to save an average household around £900 this winter and a further £500 in 2023/24. There will also be a rise in line with inflation for benefits and the State Pension starting from April 2023.

Further Support and Future Plans

Come April, the National Living Wage will experience its largest cash increase yet, soaring to £10.42 an hour. Moreover, there are plans to extend the Household Support Fund in England for another year, with a total of £1 billion in funding for devolved nations.

The DWP will provide specific start dates and eligibility criteria for each payment before the payments begin. All payments will be tax-free, not counting towards the benefit cap and not affecting existing benefit awards.

The DWP and HMRC will maintain rigorous oversight to prevent fraud and ensure equitable distribution.