Cost of living – payments and benefit

Introduction

The government has announced a package of cost of living support, including payments to benefit claimants. More than eight million households across the UK will, says the government, be entitled to additional payments made with means-tested benefits or tax credits. The payments, made in two instalments, will be part of a package that also includes an additional payment for those entitled to disability benefits, and a pensioner payment for those on winter fuel payments.1 These benefit-related payments are in addition to a £400 grant made to all UK energy customers to help with fuel bills, and a council tax rebate for those in bands A–D in England. The Household Support Fund for local authorities is also to be increased – ostensibly to provide discretionary extra support for those unable to qualify for the additional payments.

The effect on benefits

The government has stated that the payments will not affect benefit or tax credit entitlement – ie, that they will not be taken into account either as income or capital, including for the purposes of the benefit cap.2 The payments are not taxable. See also the Q&A at the end of this article.

The Chancellor has confirmed that the payments, being ‘temporary’ and ‘exceptional’ in nature, are made outside of the scope of the ‘welfare cap’ overall welfare spending limit.3

The benefit-related payments

The additional payments made to benefit/tax credit claimants will be as follows:

• two lump-sum additional payments, totalling £650, made to households on qualifying means-tested benefits on a specified ‘qualifying day’. Those qualifying benefits are universal credit (UC), income support, income-related employment and support allowance (ESA), income-based jobseeker’s allowance (JSA) and pension credit (but not housing benefit alone);
• an additional lump-sum payment of £150 for claimants on a qualifying disability benefit (on 25 May). Those qualifying benefits are disability living allowance (DLA), personal independence payment (PIP), attendance allowance, the Scottish disability benefits (child disability payment and adult disability payment), Armed Forces Independence Payment, constant attendance allowance and war pension mobility supplement;
• a pensioner payment of £300, paid with the winter fuel allowance for those entitled for 2022/23.

Means-tested additional payments

Official guidance about this support includes the following.4

• If you have a joint claim with a partner, you will get one payment of £650 for both of you, paid in two lump sums from July 2022 and in autumn 2022, if eligible.
• You will not get a payment if you are eligible for a cost of living payment from HM Revenue and Customs (HMRC) because you are entitled to tax credits.
• If you get new-style ESA, contributory ESA, or new-style JSA, you will not be entitled to the cost of living payment, unless you get UC or a disability benefit as well.
• If you also get a qualifying disability benefit, you may get an additional disability cost of living payment.

A June update to this guidance said that payment of the first instalment of £326 will begin on 14 July, for people with entitlement at some point in the period 26 April to 25 May 2022 (regarding UC, an assessment period that ended in this period). It is expected the payments of the first instalment will be complete by the end of the month.1

Tax credits

• If you have a joint claim with a partner, you will get one payment of £650 for both of you, paid in two lump sums in autumn 2022 and in winter 2022.
• You will not get a payment if you are eligible for a cost of living payment from the DWP because you are getting a low income benefit.
• If you also get a qualifying disability benefit, you may get an additional disability cost of living payment from the DWP.

A June update to this guidance says that ‘to get the first cost of living payment of £326, you must have received a payment, or an annual award of at least £26, of tax credits (ie, CTC [child tax credit] or WTC [working tax credit] or both) on any day in the period 26 April 2022 to 25 May 2022.’ The first payment will be made in autumn 2022, the second payment in winter 2022.

Disability additional payment

The official guidance includes the following.

• You will need to have been entitled to one of [the] qualifying benefits on 25 May 2022 to get the payment.
• You will get the payment by the end of September 2022.
• If you also get a qualifying low income benefit or tax credits, you may get an additional cost of living payment.

Pensioner payment

The official guidance says:

• If you are entitled to a winter fuel payment for winter 2022 to 2023, you will get an extra £300 for your household paid with your normal payment from November 2022. This is in addition to any cost of living payment you get with your benefit or tax credits.

Legislation

The additional pensioner payment has been provided for by amendment (in SI 2022 No.813) of the winter fuel payment rules. Primary legislation has been made to provide for the payments to those on means-tested benefits/tax credits (‘means-tested additional payments’) and to those on disability benefits (‘disability additional payments’). The Social Security (Additional Payments) Act 2022 received Royal Assent on 28 June.

The Act imposes a duty to make the payments (claims are not required) to those entitled to a relevant qualifying benefit or tax credit.5 For the means-tested additional payments, it is a requirement that the claimant has a ‘qualifying entitlement’ in respect of a ‘qualifying day’. For UC, that means being ‘entitled to a payment’ of a least one pence in respect of the UC assessment period ending in the month ending on the ‘qualifying day’ – ie, 25 May for the first instalment. For the legacy benefits (which here do not include housing benefit), it means being ‘entitled to a payment of at least 1p in respect of any day’ in the month ending with qualifying day. For tax credits, for the first instalment the requirement is that ‘the person receives a payment or has an award of the credit in question in the period beginning with 26 April 2022 and ending with 25 May 2022’ (the rule is the same for the second instalment except that the reference is to the month ending with the second qualifying day).6 For disability additional payments, the requirement is that the person is ‘entitled to a payment of a disability benefit that is payable in respect of 25 May 2022’.7

Q&A

Q Will the additional payments affect benefit or tax credit entitlement?

A No. The Act includes that the additional payments are not to be taken into account regarding income tax or entitlement to any benefit (be it means tested or non-means tested).8 So they cannot trigger the benefit cap or be treated as income or capital.

Q Are the payments subject to revision, supersession and appeal?

A Yes, at least in principle. The Act provides that for administrative purposes, including overpayment and appeal, the payments are treated ‘as if’ they were an award of the benefit or tax credit in question.9 However there are also powers to make regulations to modify that general position.

Q If a claimant is not getting a qualifying benefit during the qualifying period, but entitlement is later awarded for that period (eg, on revision), will that do?

A Yes, it should – the Act requires ‘entitlement to a payment’, so if such entitlement is backdated sufficiently, that should provide entitlement to the additional payment.

Q Can the members of a couple both qualify for their own awards of an additional payment?

A For a means-tested additional payment, no; for a disability additional payment, yes. For the means-tested payments, references to a ‘person’s entitlement’ are ‘…to an individual or to a couple (but not to each member of a couple separately)’.10 However the disability payments are made to ‘each individual’ who is entitled.7

Q Could a person, or a household, get both the means-tested and disability additional payments, and the pensioner payment too?

A Yes: there is nothing to prevent that, and the official guidance clearly indicates that is envisaged as a possibility.