This £326 government payment will be paid automatically into eligible tax credit-only customers’ bank accounts between 2 and 7 September 2022. The first HMRC payments will total around £360 million.
Alongside £400 off most people’s energy bills, tax cuts and the Household Support Fund, these direct payments are an important part of the government’s £37 billion package of help for households.
Angela MacDonald, HMRC’s deputy chief executive and second permanent secretary, said this first Cost of Living Payment will provide vital financial support for eligible tax credit-only claimants across the UK. A second payment will be made to eligible customers in winter.
The money will be paid automatically into bank accounts, so people don’t need to do anything to get this extra help.
These latest payments mean that more than 8 million eligible households in receipt of a means-tested benefit will have received the first of two automatic Cost of Living payments of £326 from 14 July. The second means-tested payment of £324 will be issued later this year – from autumn for Department for Work and Pensions (DWP) benefit claimants, and from winter for tax credit-only customers.
Tax credit claimants who also receive benefits from the DWP will have already received their first Cost of Living Payment from July 2022.
As well as the Cost of Living Payment, other government support includes a £400 discount from the government to help with the cost of energy bills from October onwards, a £150 council tax rebate for council tax bands A–D in England, £300 Pensioner Cost of Living Payment that will be paid alongside Winter Fuel Payments, a £150 Disability Cost of Living Payment from 20 September for those receiving an eligible UK disability benefit.
This is all in addition to changes to the Universal Credit taper rate and work allowances worth £1,000 a year on average for 1.7 million working claimants; a rise in the National Living Wage to £9.50 an hour; and a tax cut for around 30 million workers through a rise in National Insurance contribution thresholds.
There will be a specific identifier when the first payment from HMRC arrives in customers’ bank accounts.
The payment reference will be “CL”; followed by the customer’s National Insurance number (of two letters, six numbers, one letter); followed by “0001AX”.
For example, if the National Insurance number is AB123456C, the payment reference would appear as “CLAB123456C0001AX”.
For joint claimants, where one claimant receives Working Tax Credit and the other claimant receives Child Tax Credit, payments will be made into the same bank account as the Child Tax Credit.
Customers do not need to apply for this payment. If customers are eligible through receiving tax credits only, HMRC will make the Cost of Living Payment automatically into the bank account where claimants already receive their tax credits. Customers might find that their payment is delayed if they have recently closed the bank account their tax credits are usually paid into.
If customers have not let HMRC know that their bank account has changed, HMRC will pay the money into their old bank account, meaning the payment will be rejected. If this happens, HMRC will follow this up by letter to the customer, letting them know that we need updated bank details.
The latest payment schedule information will be updated on 26 August to show that the first tax credit payments will be made between 2 and 7 September.
Tax credit-only customers, who will receive the first Cost of Living Payment in September 2022, must have been entitled, or later found to be entitled, to a payment, or an annual award of at least £26, of tax credits for any day in the period 26 April 2022 to 25 May 2022.
A second Cost of Living Payment will be made to eligible tax credit-only customers from winter 2022. Payment schedule information will be updated with more specific payment dates in due course.
