Beware of these four pitfalls as cost-of-living payments hit bank accounts.
- 8 million families receiving Universal Credit will get a £301 cost-of-living payment, with the first arriving today.
- It’s the first of three payments that have been promised by the end of the current tax year – adding up to £900.
- There are four pitfalls to be aware of as payments hit bank accounts
Sarah Coles, Head of Personal Finance, Hargreaves Lansdown:
“This is a shot in the arm for eight million families, who have been wrestling with rising prices for such a long time now and have only just seen their benefits rise with inflation. But while it will make a real difference to an awful lot of people, there’s the risk you could fall prey to one of the pitfalls that mean you miss out – one of which can even leave you worse off.
You could fall prey to a scammer.
Unfortunately, each time these payments are sent out, scammers will use the opportunity to pounce on unsuspecting victims. If you haven’t received one of these payments before. You may not know you get these payments automatically. Scammers often get in touch, pretending to be from DWP. Then will ask for your bank details in order to make payments. DON’T believe them. The government has made it very clear that it won’t contact people and ask for any details. So anything you get along these lines is a scam.
It’s worth being aware that you may not get the payment on day one. If you’re eligible, you should get the payments between today and 17 May. If you get tax credits, your payments will arrive between 2 and 9 May. So don’t assume you need to act if you get nothing on day one.
You may not get a payment.
The benefits that qualify you for payment are Universal Credit, Pension Credit, Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit or Child Tax Credit. It means that if you get new style ESA, contributory ESA, new style JSA or Carer’s Allowance – and none of the others – you won’t qualify.
Perhaps the most difficult issue to wrestle with is that to be entitled to the payment. You needed to be eligible for one of these seven benefits between 26 January and 25 February. But you won’t get anything if your award was reduced to zero for this period. This may be because you were sanctioned, you may have received two wage packets during the period, or your wages or savings may have gone up briefly at this point. Whenever the government sets rules like this, there will be some people who fall out at the margins. When you’re in this position, it can feel horribly cruel.
You may not know you’re eligible for it.
You’ll get it automatically if you qualify. The trouble is that an awful lot of people don’t realise they’re eligible for the benefits that open the door to these payments. You can check whether you could receive benefits using the Gov. UK calculator.
If you’re over the state pension age and are on a low income, you could be entitled to receive Pension Credit. Age UK estimates that a third of people who could get this benefit are still not claiming it. This not only tops up your income and could qualify you for other benefits but also makes you eligible for a total of £900 from three cost-of-living payments by next spring. The good news is that you can make a backdated application any time before 19 May and still receive the payments.
It may not get you out of a financial hole.
By this stage, for a lot of people, £301 will be a drop in the ocean compared to what they owe either in late bills or debts. If you’re struggling, it’s worth checking whether you can get any other support.
If you’re on these benefits, you may also qualify for cheap broadband because some providers offer a much less expensive ‘social tariff’. Ofgem says millions of people may be missing out on them.
Your energy supplier may offer non-repayable grants to people suffering real financial difficulties. The major companies tend to offer them to their own customers – including EDF, E.on Next, Shell and Scottish Power. British Gas Energy Trust offers grants to people who are struggling – regardless of whether they are British Gas customers. You need to contact them and check their eligibility rules and how to apply. The process can be onerous, so don’t be afraid to ask for help with it from charities like Stepchange and Citizens Advice. They’ll also be able to let you know about more support available locally.
The Household Support scheme in England is available from your local council and is designed to help people in really desperate circumstances. They will have specific criteria and an application process, so get in touch and ask.
There will also be a £150 payment in the summer for the 6 million people in receipt of either Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Scottish Disability Benefits, Armed Forces Independence Payment, Constant Attendance Allowance or War Pension Mobility Supplement. Plus, there will be a £300 top-up to Winter Fuel Payments to pensioners at the end of 2023.
If you don’t qualify for help and you’re struggling to pay your bills, contact whoever you owe money to. If you approach them and ask for help, they may be able to offer you an affordable payment plan, payment reductions or time to pay. It’s worth doing what you can to come to an agreement with them because it’s much better than the alternative if they start to take steps to enforce payments. However, if after talking things through with them, you can’t see how you can pay, StepChange or Citizens Advice can work with you to find a way through it.”