If you live in the United Kingdom and are part of a working household, and you get Tax Credit, then there is good news for you. The government has recently announced a one-time assistance of £500, which is being given to provide relief to financially weak families.
Why is this assistance being given?
Some time ago, the government temporarily increased the Working Tax Credit by £20 per week, which provided relief to millions of families. But this increase ended on 5 April 2021. After this temporary assistance ends, the government has decided to give a tax-free lump sum of £500 to those who were receiving its benefit not to suffer.
The government says that this amount is for those who were already taking Working Tax Credit or whose income level was a little higher and hence were not able to pay Working Tax Credit, but they were eligible for it.
Who will get this £500 payment?
This one-time payment will be given to those people who met the following conditions on 2 March 2021:
- They were getting Working Tax Credit.
- Or they were getting Child Tax Credit and were eligible for Working Tax Credit, but their income was a little higher, so they did not get the payment.
The government has clarified that there is no need to apply for this. HMRC (Her Majesty’s Revenue and Customs) itself will contact eligible people through text message or letter and tell them that they are entitled to this payment.
Schedule of Cost of Living Payment in 2025
Apart from this one-time assistance, the government is also giving Cost of Living Payment in 2025. This payment will be made in three parts, so that families get relief throughout the year:
Phase 1 (March – May 2025): £301
This is the first payment received after winter, so that families can recover from the heavy bills of winter.
Phase 2 (July – August 2025): Up to £200
This will be given to deal with rising expenses in summer, especially when electricity and water bills are high.
Phase 3 (October – December 2025): Remaining amount
At the end of the year, considering the necessary expenses in the festivals and winter, the final payment will be made so that the total assistance of £500 is completed.
How will you get payment?
All these payments will be made directly into the bank accounts that are already linked to your benefit claims. This ensures that there is no delay and the process is easy.
But the thing to note is that your bank account information should be correct and updated. If you have recently changed your bank account or any other details, inform the DWP (Department for Work and Pensions) immediately.
If the payment does not arrive or there is a mistake, you should immediately contact the DWP helpline.
Why was the scheme extended?
In the earlier scheme, about 1.4 million families were eligible for this assistance. But later it was found that some people were deprived because they did not report the change in income in the middle of the year. But when the final income assessment was done, they were found to be eligible.
For this reason, the government made the rules a little flexible, and they were included under the extension rules.
Who is eligible under the extension?
If you did not receive the payment earlier, you may still be eligible under this extension if:
- Your 2020-2021 final tax credit record had an entry for the working tax credit.
- You receive any working tax credit or child tax credit that year.
What to do if you haven’t received a payment yet?
If you think you’re eligible for the scheme but haven’t received a payment, you can contact HMRC’s Tax Credit Helpline or web chat. Remember, eligibility under the extension will only be valid if your tax record has been finalised.
Where can the support be used?
The money can help people meet their daily needs, such as:
- Paying rent or a home loan
- Paying essential bills such as electricity, gas, and water
- Buying food items
- Children’s school fees or uniforms
- Needing a heater or warm clothing during the cold season
The government wants to provide such support to ensure that vulnerable people can lead normal lives without financial pressure.
Read more: Veterans to Receive $1,200+ Stimulus Checks in 2025 – Full Breakdown
What is the role of local councils?
The government gives money to local councils through the DWP, and they decide who gets the money and how. For example:
- Solihull Council is providing relief payments of up to £147 in energy bill vouchers or a direct £500 payment to those in need.
- In many places, councils are also providing free meal vouchers, school uniforms and heating support to school-going children.
So it’s important to check your local council’s website to find out which schemes are available.
Conclusion – Will you benefit from this scheme?
If you are covered under Working Tax Credit or Child Tax Credit, this scheme is for you. This £500 tax-free payment is not just meant to provide financial support, but also to help ease everyday pain.
This scheme is a step that can provide some stability to families who are struggling in this time of inflation.
So if you are eligible, just wait – HMRC will contact you and check if there is a problem.
Contact them and ensure this relief for your family.
