Does everyone on Universal Credit get the cost of living payment?

Aa details of a second wave of cost of living payments has been announced, you may be wondering ‘does everyone on Universal Credit get the cost of living payment’?

Back in November 2022, Chancellor of the Exchequer Jeremy Hunt (opens in new tab) announced who is eligible for another cost of living payment (opens in new tab) to help those on low incomes cope with rising prices. This follows a £650 cost of living payment (opens in new tab) that was made in 2022. 

The new payment will be £900 although, as with the £650 payment, it won't be paid in one go. It will be split into three instalments. While the specific payment dates haven't yet been confirmed, the Government has said that the first instalment will be paid in spring 2023, the second in autumn 2023, and the final instalment will be paid in spring 2024.

Nick Hill (opens in new tab), senior advice manager at the Money and Pensions Service, says:  “The £900 cost of living payment will help millions of the lowest-income households by providing a consistent support offering throughout the year. However, many may still be worried about their finances over the coming months.

“If you’re already struggling, or you’re worried you will be soon, there is free help and guidance available. I’d encourage you to reach out and use our MoneyHelper service (opens in new tab) to help you find your way forward and remember, you don’t have to go through this alone.”

Does everyone on Universal Credit get the cost of living payment? 

Yes, everyone on Universal Credit will get the £900 cost of living payment. However, there will be an assessment period for each payment and the government has not announced these yet. You must have been receiving Universal Credit, or have submitted a claim that went on to be successful during the assessment period to qualify for the payment. 

With the £650 cost of living payment, you had to be getting Universal Credit for an assessment period that ended in the period 26 April 2022 to 25 May 2022, to receive the first instalment of £326. Even if you didn't qualify for the first instalment of the cost of living payment, the assessment period for the second payment was later, so some people who didn't qualify for the first instalment did end up qualifying for the second. The assessment period for the second payment of £324 was 26 August to 25 September 2022. 

We can expect that similar assessment period dates will be announced for each instalment off the new £900 payment. We’ll update this piece when these details are announced by the government.

You don’t need to apply for the £900 payment and it will automatically be paid in the same way you receive your benefits.

You will also be entitled to it if you claim other means-tested benefits, even if you only get a few pence of a certain benefit. This creates a ‘cliff edge’ system that some critics say isn’t fair. 

Phil Agnulik (opens in new tab), director of EntitledTo.com, wrote in a blog post (opens in new tab): “The cliff edge issue is that, in order to qualify for a cost of living payment you need to be in receipt of certain means-tested benefits. But receiving these benefits can mean getting hundreds of pounds a month or just a few pence – even the smallest entitlement qualifies for the full £900 payment. 

“This creates the most obvious source of unfairness: people with earnings just above the level where they would qualify miss out on the full £900 rather than support being withdrawn gradually.”

Who else qualifies for the cost of living payment?

In addition to Universal Credit, according to the Government’s official guidance, you’ll be eligible for the £900 cost of living payment if you’re getting any of the following (during the yet-to-be-confirmed assessment period):

• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Income Support
• Pension Credit
• Child Tax Credit
• Working Tax Credit.

If you think you might be eligible for any of the benefits listed above, it's a good idea to apply as soon as possible to maximise your chances of getting all three instalments of the £900 payment. 

 Who pays the cost of living payment? 

The cost of living payment will come from the government’s Department of Work and Pensions. 

You should receive the payment in the same way you receive your benefit but it will be made as a separate payment rather than being included with your benefit. In your bank, building society, credit union account, or on your Payment Exemption Service voucher receipt it will be labelled as ‘DWP Cost of Living’.

The payment is tax-free and won’t count towards the benefit cap. 

If you claim Universal Credit, you should also take a look at the Universal Credit rule change (opens in new tab) that was announced in 2022 and see what it could mean for you. 

When will I get the cost of living payment?

When he announced details of the scheme, Chancellor of the Exchequer, Jeremy Hunt said: “I know these are tough times for families across the UK who are struggling to meet rising food and energy costs, driven by the aftershocks of Covid and Putin’s war in Ukraine.

“That’s why we’re putting a further £900 into the pockets of over 8 million low income households next year. These payments are on top of above inflation increases to working-age benefits and the Energy Price Guarantee (opens in new tab), which is insulating millions from even higher global gas prices.”

The £650 cost of living payment was introduced last year by Rishi Sunak when he was chancellor. Following Boris Johnson’s resignation as prime minister, and Liz Truss’ brief spell in the position, Rishi Sunak (opens in new tab) is now prime minister with Jeremy Hunt as chancellor.

While the £650 cost of living payment was paid in two instalments - in July and November 2022 - the £900 payment will be split into three and paid as follows:

• Spring 2023 – first cost of living payment of £301
• Autumn 2023 – second cost of living payment of £300
• Spring 2024 – third cost of living payment of £299

The differing amounts make the payments easier to track and reduce the risk of fraud.

Don't forget that almost all households are also receiving a £400 energy rebate (opens in new tab) paid in monthly instalments between October 2022 and March 2023. 

Emma Lunn

Emma Lunn is a multi-award winning journalist who specialises in personal finance and consumer issues. With more than 18 years’ experience in personal finance, Emma has covered topics including mortgages, first-time buyers, leasehold, banking, debt, budgeting, broadband, energy, pensions and investments. Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday and the Mirror.