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The first cost of living payments will be paid from Thursday, July 14 but how much is it and who will get the money?

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More than eight million households in the UK are about to get a cash payment from the government to help them with the escalating cost of living.

The first instalment of £326 will begin arriving in people's bank accounts from Thursday and won't ever have to be paid back - but who exactly will receive the money and why?

Struggling families will get their first cost of living cash payment in July
Struggling families will get their first cost of living cash payment in July

What is a cost of living payment?

In May the government unveiled a package of measures designed to help everyone with the rising cost of bills and prices.

Every household in England, Scotland and Wales will receive a base payment of £400 later this year that will be added to energy bills in the form of a credit while - additionally - anyone on means-tested benefits is being given a further £650 and pensioners who receive winter fuel payments £300.

Those who are on non-means-tested disability benefits will get an extra payment of £150.

But with bills rising at such an alarming rate, and record increases to energy bills now forecast for October, charities are already warning that this injection of money will do little to relieve the pressure on those already struggling and is likely to be swallowed up within weeks.

What is being paid out this month?

Millions of low income households claiming means-tested benefits are being given the £650 cost of living payment to help with rising bills. This is being broken down into two separate instalments and it is the first of those that will start arriving from Thursday (July 14). The money is being paid out steadily and the speed at which it arrives will depend on how quickly the system can cope and process the funds but it is thought everyone entitled should have their money by the end of the month.

The first payment is for £326. A second instalment of £324 will then be sent to qualifying low income households in the autumn to help them further.

The payments, say officials, are designed to be deliberately slightly unequal to minimise fraud risks while households who didn't qualify for the first payment can still obtain the second if their circumstances have changed.

receipt after payment in the supermarket. (57365355)
receipt after payment in the supermarket. (57365355)

Who is getting July's £326?

While every household in the UK will be given £400 to put towards the cost of energy bils in the autumn (on top of the £150 Council Tax rebate that has already been paid) this extra £650 lump sum is reserved for those likely to be struggling the most.

The DWP will pay this money to all households receiving the following benefits: Universal Credit, Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit and Pension Credit.

Payments from HMRC for those on tax credits only will follow shortly after to avoid duplicate payments.

To be eligible to get this first bout of cash claimants needed to be in receipt of one of the benefits listed above, or have begun a claim which is later successful, as of May 25 this year.

The eligibility date to be entitled to receive the second instalment - for people whose circumstances might have since changed - will be announced soon says the government.

Cost of living payments are tax free
Cost of living payments are tax free

Does the money affect other benefits?

The short answer is no, it won't.

This £326 cost of living payment is designed to give people extra money in their pocket to help pay the bills so it will be tax-free, will not count towards any benefit cap and so will not have any impact on any existing benefits or financial support someone may be claiming.

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