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Who is eligible for the £650 cost of living allowance?

by Nick Gallimore, Managing Director - People Management

On the 23rd August 2022, the Government announced a proposed cost of living payment to eligible households. The payments, set to be issued in two instalments beginning in September 2022, have been touted as a response to the deepening cost of living crisis, which has seen household costs for essentials such as food and utilities, skyrocket in recent months.

The then current UK Chancellor of the Exchequer Nadhim Zahawi was quoted as saying of the announcement:

“We know that rising prices faced by many countries around the world are a significant worry for many people here in the UK, especially those most vulnerable to additional costs… This payment is in addition to further help households can expect over the coming months – including a second cost of living payment of £324 for households on means-tested benefits, £300 for pensioners this winter and £400 discount on energy bills for every household. This is all part of our significant £37 billion support package.”

This £650 payment is ostensibly designed to help ease some of the more immediate effects of the crisis on the lowest earning households across the UK and will be a necessary boon for many, particularly as we head closer to winter.

Who is eligible for the payment?

According to the project objectives outlined on the website, the payment will be made to eligible households who are receiving income-related benefits from DWP (Universal Credit, Pension Credit, Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance.

To be eligible for the first Cost of Living Payment (COL) of £326, customers on tax credits and no other qualifying benefits must have been entitled, or later found to be entitled to, a tax credits payment, or an annual award of at least £26, for any day between 26 April 2022 to 25 May 2022. Eligibility for the second payment will be published shortly.  The payments are means tested, meaning that as circumstances change, people may find themselves suddenly eligible for one or more payments.

What do you need to do?

If you believe you’re eligible for one or more of these payments, the good news is that there is no burden on you to do anything to receive the allowance. HMRC will establish the eligibility of all recipients and those set to receive a payment will receive a letter setting out the eligibility criteria and when each payment can be expected.

There is no need to fill out additional forms or apply externally, all eligibility will be determined by HMRC. Similarly, for employers, as these payments are interlinked with tax credits and other benefits, there are no additional responsibilities for businesses when it comes to the implementation of this cost of living allowance.

Nick Gallimore

Nick Gallimore


Managing Director - People Management

Nick is a Talent Management specialist, who has spent his entire career working with organisations looking to transform the way they hire, develop and manage their people. He works with our HR software customers, providing specialist consulting and advice around all aspects of the Talent Management lifecycle, helping them to deliver their strategic people aims.

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