Chancellor Rishi Sunak announced measures aimed at relieving some of the pressure households face amid the cost of living crisis.
He confirmed there would be £ 15bn worth of support to help people through dire times, with energy costs set to soar to £ 2,800 a year in October.
Mr Sunak has agreed to impose a windfall tax on the spiralling profits of oil and gas firms to fund a cost of living relief package. Mr Sunak said the 25% energy levy would raise around £ 5 billion that will be used to send a one off payment of £ 650 to more than eight million households.
READ MORE:Seven small changes that could save you hundreds on household bills
The payments will be made by the Department for Work and Pensions in the summer and autumn. We’ve broken down, month by month, what support will be available to people and when, so you can plan your finances, as reported by Wales Online ..
July 6: National Insurance threshold raised
On July 6, the threshold of what you can earn before paying National Insurance will rise from £ 9,880 to £ 12,570 a year. It will take some of the lowest earners out of paying the tax, and save those still paying £ 330 a year.
But that’s before you factor in two things: firstly, National Insurance rose in April from 12% to 13.25% thanks to –you guessed it –Rishi Sunak. Once you put the tax AND threshold rises together, only people who earn less than £ 37,000 And they might not feel like celebrating –£ 30k earners are only £ 53 better off per year.
Secondly, if you’re working but on Universal Credit you’ll feel less help because for every pound you earn, 55p of benefits are “tapered” away. Models suggest a single parent on £ 16,000 and UC will gain £ 27 a month from the threshold change but £ 15 of that will be cut in Universal Credit. This applies throughout the UK.
July: £ 325 for most benefit claimants
More than eight million UK claimants of Universal Credit, Tax Credits, pension credit and legacy benefits will get two payments of £ 325 each. If you’re on any of these benefits except Tax Credits, your first payment will arrive in your bank account “ from ”July.
The exact payment date is not yet confirmed and will likely depend on when you get Universal Credit during the month. Claimants must have begun a claim for these benefits by 25 May 2022 at the latest to qualify for the first of the two payments.
The £ 650 will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards. This applies throughout the UK.
Late summer or early autumn: £ 325 for some Tax Credit claimants
People on Tax Credits will also get two payments of £ 325. But theirs will take longer to arrive because they are being administered by HMRC, not the DWP.
It’s understood these are due in late summer or early autumn for the first payment, and by Christmas for the second payment. This applies throughout the UK.
By September: £ 150 for disabled Brits
£ 150 will be paid into the bank accounts of 6million people on the following disability benefits:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Scottish Disability Benefits
- Armed Forces Independence Payment
- Constant Attendance Allowance
- War Pension Mobility Supplement
People will have had to be claiming, or started a (later successful) claim for, these benefits by May 25. They will be made directly, be exempt from tax, not count towards the benefit cap, and not have any impact on existing benefit The timing is not nailed down because the DWP has not passed the necessary laws to pay the money yet. This applies throughout the UK.
Autumn: Second £ 325 payment for benefit claimants
As we explained, the £ 650 one-off payment for people on benefits is coming in two £ 325 lump sums to bank accounts. There is no date yet for the second lump sum, but the government says it will arrive in the Autumn for people On Universal Credit, Pension Credit, and most legacy benefits. Again, people on Tax Credits will have to wait longer –the only guarantee is they’ll get it by the end of the year.
October to March: £ 400 energy bills discount for all
A “buy now pay later” £ 200 discount off all Brits’ electricity bills from October 1 –which had to be paid back over five years –has been axed. Instead, all households will get £ 400 off their electricity bills from October as a non-repayable grant. You won’t get the £ 400 credited to your account in one go. It will happen over the course of six months from October to March. So if you pay by monthly direct debit you might get £ 66.67 off your bill per month. It’s a direct discount off your bills, not cash you can spend.
That means you’ll likely find your monthly bills are still higher than they were at the same time last year. Customers with pre-payment meters will have the money applied to their meter or via a voucher. The mechanism for each firm isn’t confirmed yet. This applies throughout Britain but not Northern Ireland, where the administration has been told to devise its own scheme.
November to December: £ 300 payment for most pensioners
A one-off’Pensioner Cost of Living Payment’of £ 300 will go to pensioner households who receive the Winter Fuel Payment in November or December. These payments, worth £ 2.5bn, will be paid alongside the Winter Fuel Payment which is worth between £ 100 and £ 300 for pensioners.
For most pensioner households, this will be paid by direct debit. People are eligible if they’re aged 66 or over by September 19, although some pensioners do not qualify for the Winter Fuel Payment. This applies throughout the UK.
April 2023: Benefit and pension uprating
Even though benefits and pensions are not being permanently raised now –something many have called for –there will be a big rise next year. April 2022’s rise was a measly 3.1%, below inflation, because it was based on the CPI figure for September 2021 . But in April 2023 the rise could be an above-inflation 10%.
Rishi Sunak said he would stick to that plan, subject to a review by the Work and Pensions Secretary. He said: “On current forecasts it’s likely to be significantly higher than the forecast inflation rate for next year.”
Mr Sunak also said the triple lock will return to the state pension –ensuring it rises by inflation, wages or 2.5%, whichever is highest. That means pensions are likely to rise by around 10% too. This isn’t a surprise but is a big commitment after the Tories broke their manifesto pledge on the triple lock last time. This applies throughout the UK.
Receive newsletters with the latest news, sport and what’s on updates from the Liverpool ECHO by signing up here