Cost of living: 8 money changes this December, including £300 cost of living payment and DWP Christmas bonus

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UK households will get a financial boost this month to help with rising living costs

Households across the UK will get a boost to their finances this month as a series of payments roll out in December.

The final month of the year is typically an expensive one as Christmas approaches, and finances will be squeezed even tighter for many this year due to rising cost of living pressures.

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The UK government announced an emergency £37 billion package of support earlier this year to help households cope amid soaring energy prices and rocketing inflation, with the package set to provide at least £1,200 to the most vulnerable homes.

Further cost of living payments are due to arrive in December, along with the next instalment of the £400 energy rebate. Benefits claimants are also set to receive payments on a different date this month, with some in line to get a Christmas bonus.

Listed are eight financial changes due to come this month and the payment dates for your diary.

UK households will get a financial boost this month (Composite: Kim Mogg / NationalWorld)UK households will get a financial boost this month (Composite: Kim Mogg / NationalWorld)
UK households will get a financial boost this month (Composite: Kim Mogg / NationalWorld) | Kim Mogg / NationalWorld

£300 cost of living payment

Millions of pensioners who receive a Winter Fuel Payment will receive an extra £300 on top of this in the form of a new cost of living payment being issued in November and December.

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The Winter Fuel Payment is worth between £100 and £300 and is paid to everyone over the state pension age, meaning people could receive up to £600 cash in total.

The money is due to be paid to all eligible households by 13 January 2023. The payment will appear in bank statements with the payment reference starting with your National Insurance number followed by “DWP WFP” for people living in England, Scotland and Wales, or “DFC WFP” for people in Northern Ireland.

Most payments will be automatic in November or December, but some people may need to make a claim, such as those who qualify but do not receive benefits or the state pension and have never previously received a Winter Fuel Payment, the DWP said. Anyone who has not received a payment by 13 January 2023 is advised to contact the Winter Fuel Payment Centre.

DWP Christmas bonus

The Department for Work and Pensions (DWP) is issuing a £10 Christmas bonus to households that claim certain benefits in December.

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The £10 payment is a one-off tax-free ‘Christmas Bonus’ from the government department and is paid automatically - normally in the first full week of December.

The bonus won’t impact any other benefits received and the £10 payment is likely to show up on your bank statement as ‘DWP XB’, according to the government.

To be eligible for the payment, you must be a resident in the UK, Channel Islands, Isle of Man or Gibraltar during the qualifying week. You must also be in receipt of a certain type of benefit from the government during the first full week of December, known as qualifying week.

These benefits include Carer’s Allowance, Child Disability Payment, Disability Living Allowance, State Pension, Widow’s Pension and Armed Forces Independence Payment. The full list of benefits that qualify you for the payment is as follows:

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  • Armed Forces Independence Payment
  • Attendance Allowance
  • Carer’s Allowance
  • Child Disability Payment
  • Constant Attendance Allowance (paid under Industrial Injuries or War Pensions schemes)
  • Contribution-based Employment and Support Allowance (once the main phase of the benefit is entered after the first 13 weeks of claim)
  • Disability Living Allowance
  • Incapacity Benefit at the long-term rate
  • Industrial Death Benefit (for widows or widowers)
  • Mobility Supplement
  • Pension Credit - the guarantee element
  • Personal Independence Payment (PIP)
  • State Pension (including Graduated Retirement Benefit)
  • Severe Disablement Allowance (transitionally protected)
  • Unemployability Supplement or Allowance (paid under Industrial Injuries or War Pensions schemes)
  • War Disablement Pension at State Pension age
  • War Widow’s Pension
  • Widowed Mother’s Allowance
  • Widowed Parent’s Allowance
  • Widow’s Pension

£67 energy discount

The third energy bill discount payment - which is worth £400 in total - will be sent out to households in December.

Every household in England, Scotland and Wales is eligible for the discount which s being paid in six instalments over a period of six months.

Payments of £66 began rolling out in October, so households have already received £123 in total, and further payments worth £67 will be sent out from December 2022 to March 2023.

All households in England, Scotland and Wales with a domestic electricity connection are eligible to receive the support.

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The government said those with a domestic electricity meter point paying for their energy via standard credit, payment card and direct debit will receive an automatic deduction to their bills over a six-month period from October, totalling £400. There is no need for households to contact energy suppliers concerning the payment as customers will be automatically eligible.

Households in Northern Ireland will also receive a £400 discount on electricity bills through the Northern Ireland Energy Bills Support Scheme (NI EBSS).

Early benefits payment dates

If your normal benefits payment from the DWP falls on a bank holiday then you may be paid earlier than normal this month.

There are a couple of bank holiday dates coming up, including Monday 26 December and Tuesday 27 December - the latter being a replacement bank holiday for Christmas day which falls on a Sunday this year.

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It means that payments set to arrive on 24, 25, 26 or 27 of the month will instead be paid on Friday 23 December. If you get your payment on the second of the month, the one due to go into your account on 2 January 2023 should instead appear on Friday 30 December 2022.

For those who receive a form of benefit that is paid out fortnightly - including Employment and Support Allowance (ESA), Income Support and Jobseeker’s Allowance - if your payment date is going to fall on any of the bank holidays, you will instead receive it on the last working day beforehand.

Anyone who is paid their benefits on a different date from those listed above can expect their money to arrive on the same day as usual.

Inflation figures released

The Office for National Statistics (ONS) is due to release the inflation rate for the 12 months to November on 14 December.

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Consumer Price Index (CPI) inflation hit a 41-year high of 11.1% in October, with the high figure largely due to soaring food and energy costs.

Inflation is a measure of how the price of goods and services have changed over the past year, and when it is high, the cost of everyday items, such as food, fuel and bills, also goes up.

Earlier this month the governor of the Bank of England Andrew Bailey admitted that higher inflation is hitting lower income households harder because a bigger proportion of their spending goes on essentials like food and energy.

He said: “Inflation is bad for the least well-off generally and this inflation is particularly bad. The reason is that it’s concentrated on energy and food – these are the essentials of living.”

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Bank of England interest rates decision

The Bank of England will meet on 15 December to decide whether to raise interest rates even further in December.

The bank increased its base rate on 3 November from 2.25% to 3% - a rise of 0.75 percentage points and the biggest single hike in more than 30 years.

It is expected that rates will rise again, which would mark the ninth time the base rate has increased this year. The base rate is what the Bank of England charges other banks and lenders, which in turn influences the rates they charge customers.

Raising interest rates is intended to encourage people to save money, rather than spend, which is meant to help bring inflation back under control.

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It also means that the cost of borrowing on products like mortgages, credit cards and loans becomes more expensive.

Pension Credit cut-off

Pension Credit is a benefit that tops up your income if you are over state pension age and it can be backdated by three months. It means that 18 December is the last day you can still make a claim for the benefit to qualify for the £324 cost of living payment.

Most people eligible to receive the government’s £650 cost of living payment received the second instalment worth £324 this month. To get the second payment, you will need to have been in receipt of any of one of the eligible benefits, including pension credit, for any day in the period 26 August to 25 September 2022.

Pension Credit also unlocks extra help including council tax discounts, housing benefit, free health costs and a free TV Licence for the over 75s.

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The government website states: “To be eligible for the £324 Cost of Living Payment, claimants must have been entitled to one of the qualifying benefits between 26 August and 25 September, with the exception of pensioner households, who may be able to have a new Pension Credit claim backdated.

“Pensioners have until 18 December to submit a valid claim for Pension Credit, which could entitle them to the £324 Cost of Living Payment. Anyone can check their eligibility for Pension credit using the online calculator or by calling the freephone claim line (0800 99 1234).”

Chancellor Jeremy Hunt also confirmed in November that Pension Credit will increase by 10.1%. He told the Commons: “To support the poorest pensioners, I have decided to increase the pension credit by 10.1% which is worth up to £1,470 for a couple and £960 for a single pensioner in our most vulnerable households.

“But the cost-of-living crisis is harming all pensioners so because we have taken difficult decisions elsewhere in this statement, I can today announce that we will fulfil our pledge to the country to protect the pensions triple-lock.”

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Cold weather payments

When temperatures plummet in winter, people in low-income households can receive a £25 cold weather payment.

You will receive a payment if the average temperature in your area is recorded as, or forecast to be, zero degrees celsius or below over seven consecutive days.

A payment of  £25 will be issued for each seven day period of very cold weather between 1 November and 31 March. You may get Cold Weather Payments if you receive:

  • Pension Credit
  • Income Support
  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance
  • Universal Credit
  • Support for Mortgage Interest

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