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

As the payment date for the second instalment is announced, you may be wondering if everyone on Universal Credit will get the cost of living payment?

Back in November 2022, Chancellor of the Exchequer Jeremy Hunt announced who is eligible for another cost of living payment to help those on low incomes cope with rising prices. This follows a £650 cost of living payment 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. Make sure you also check the qualifying dates for the cost of living payments to confirm you are eligible.

Nick Hill, 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 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. The first instalment has already been paid, but in order to receive the second instalment, 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. The assessment period for the second cost of living payment is between 18 August and 17 September 2023.

As with the £650 cost of living payment made in 2022, there were different assessment periods for each instalment, so while someone may not have qualified for the first instalment, they may have qualified for the second. So it's important to apply for Universal Credit as soon as possible if you think you are eligible. While you will have missed the assessment period for the first and second instalments, if you are found to be eligible, you will likely qualify for the third cost of living instalment, due in spring 2024.

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, director of EntitledTo.com, wrote in a blog post: “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 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 the amount you can get.

 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 that was announced in 2022 and see what it could mean for you. 

When will I get the cost of living payment?

The £900 payment will be split into three. The first instalment has already been paid and the second will be paid between the end of October and mid-November.

• First cost of living payment of £301 was paid between 25 April and 17 May 2023
• Second cost of living payment of £300 - due to be paid between 31 October and 19 November 2023
• Third cost of living payment of £299 - due spring 2024, date to be confirmed.

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

You might also find it useful to see how much your energy bills will cost from October and whether your cost of living payment can help with high bills.

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.