Tax credits: Cost of living payment is being paid this week

HM Revenue and Customs (HMRC) started issuing the first part of the £650 means-tested cost of living payment to more than one million people on tax credits last Friday. The tax authority expects most of the lump sums to have been made by tomorrow. The payments are being made as part of the extra help announced by the Government earlier this year to help people deal with the cost of living crisis. 

Those in receipt of certain benefits are also eligible, receiving the £650 in two parts.

The first £326 payment was issued in July this year. 

The second payment of £324 is to come in the autumn, however, the second date for the payment to be given to those on tax credits is to come a bit later into the winter months.

The Department for Work and Pensions (DWP) stated that this round of payments is total to about £360million.

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People should keep an eye out on their bank accounts to make sure that they receive the payout. 

The DWP stated that there would be a specific identifier when the first payment from HMRC arrives in customers’ bank accounts.

The Government department explained that the payment reference will be “CL” followed by the customer’s National Insurance number.

It will then be followed by 0001AX.

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The DWP stated: “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, the payments will be made into the same bank account as the Child Tax Credit.

The qualify for the support, people must have been entitled or later found to be entitled to tax credits between the dates of April 26 to May 25, 2022.

The entitlement is to tax credits or the annual award of at least £26 of tax credits. 

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If people have not received their £326 payment between the published payment dates, they should wait until September 16, at the earliest to contact HMRC.

This is to allow time for the payment to be processed.

The department previously warned that there may be a delay in payments for some people who have recently closed the bank account their tax credits are usually paid into and have not informed HMRC of the change.

HMRC stated that the money may be paid into the old bank account and will cause the payment to be rejected. 

Angela MacDonald, deputy chief Executive and second permanent secretary at HMRC 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 from the winter. The money will be paid automatically into bank accounts, so people don’t need to do anything to get this extra help.”

As well as the Cost of Living Payment, the Government has provided a £150 council tax rebate for council tax bands A-D in England, and a £150 payment to Britons receiving an eligible UK disability benefit. 

The Government is also providing a £400 discount to help with the cost of energy bills from October onwards and a £300 Pensioner Cost of Living Payment that will be paid alongside Winter Fuel Payments. 

 

 

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