Glossary · UK
What is Cost of Living Payment?
A series of one-off, tax-free government payments made automatically to households receiving means-tested benefits, Pension Credit or certain disability benefits during periods of high inflation.
Full Definition
Cost of Living Payments were a series of one-off, tax-free payments made by the UK government directly to eligible households during 2022 to 2024 in response to sharply rising energy and food prices, targeted mainly at people receiving means-tested benefits such as Universal Credit, Pension Credit, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Income Support, Child Tax Credit or Working Tax Credit during a specific qualifying assessment period, with separate additional payments made to people receiving a qualifying disability benefit (such as PIP or Attendance Allowance) and to pensioner households receiving the Winter Fuel Payment. Payments were made automatically by DWP or HMRC without the recipient needing to apply, using the same account into which the person's regular benefit was paid, and did not count as income for the purposes of calculating other means-tested benefits or count towards the benefit cap. Although the specific rounds of Cost of Living Payments ran only for a limited period and have since ended, they set a template the government has drawn on in other cost-of-living interventions, such as targeted energy support and expanded Household Support Fund allocations to local authorities, and government guidance continues to be updated to reflect whichever cost-of-living support measures are currently in force.