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In 2025, the UK government has approved a one-off payment of £500 to support financially vulnerable families.
This assistance aims to help working households who were previously receiving Tax Credits, providing much-needed relief.
If you qualify, this tax-free lump sum will offer financial assistance and help alleviate the financial burdens that many families face today.
Why Is This Assistance Being Given?
In response to the growing financial challenges that many families are facing, especially after the temporary Working Tax Credit increase of £20 per week ended on 5 April 2021, the government has decided to provide a £500 one-off payment.
The goal is to ensure that families who were affected by the changes continue to receive support during these tough times.
The government acknowledges that some families were not eligible for the Working Tax Credit because their income slightly exceeded the threshold, despite still needing support. This payment is aimed at easing their financial strain.
Who Will Receive This £500 Payment?
To be eligible for this one-off payment, individuals must have met certain criteria on 2 March 2021. The payment will be distributed to:
- Individuals who were receiving Working Tax Credit.
- Those who were receiving Child Tax Credit but did not qualify for Working Tax Credit due to a slightly higher income.
The government will automatically notify eligible individuals via text message or letter. There is no need to apply for this payment.
Schedule of Cost of Living Payments in 2025
In addition to the one-time £500 payment, the government has introduced a Cost of Living Payment to help families manage rising expenses throughout 2025.
This payment will be divided into three phases, ensuring that families receive continued support throughout the year.
| Phase | Time Period | Amount | Purpose |
|---|---|---|---|
| Phase 1 | March – May 2025 | £301 | To help families recover from winter bills |
| Phase 2 | July – August 2025 | Up to £200 | To manage rising summer expenses (e.g., utilities) |
| Phase 3 | October – December 2025 | Remaining £500 | To cover expenses during festivals and the winter period |
How Will You Receive the Payment?
The £500 payment and the Cost of Living Payment will be paid directly into the bank accounts linked to your benefit claims.
Make sure that your bank details are up to date with the Department for Work and Pensions (DWP) to avoid any delays. If your account details have changed recently, it’s essential to inform the DWP immediately.
If there are any issues with your payment, contact the DWP helpline right away for assistance.
Why Was the Scheme Extended?
Initially, about 1.4 million families were eligible for this assistance. However, some individuals were overlooked because they didn’t update their income details throughout the year.
After the final income assessment, these families were found eligible for the payment, prompting the government to extend the scheme and make it more inclusive.
Who Is Eligible Under the Extension?
If you didn’t receive the payment initially, you may still be eligible for the £500 under the extension if:
- Your final tax credit record for 2020-2021 indicated eligibility for Working Tax Credit.
- You received Working Tax Credit or Child Tax Credit during that period.
To confirm your eligibility, you can contact the HMRC Tax Credit Helpline or use their online chat service.
How Can You Use This Financial Support?
The £500 payment can be used for a variety of essential expenses, including:
- Paying for rent or mortgage
- Settling utility bills such as electricity, gas, and water
- Purchasing food and groceries
- Covering school fees and uniform costs for children
- Buying necessary clothing or a heater during colder months
The government hopes that this payment will ease the financial pressures many families are facing, helping them to maintain their standard of living without struggling.
The Role of Local Councils
Local councils play a crucial role in distributing support to families. The DWP allocates money to these councils, which then decide how to distribute it. For example:
- Solihull Council is offering energy bill vouchers up to £147 or a direct £500 payment to families in need.
- Many councils also provide free meal vouchers, school uniforms, and heating support to families.
It’s important to check your local council’s website to find out which additional schemes are available in your area.
The £500 one-off payment offers vital financial support to eligible families in the UK, helping them manage the challenges posed by living costs.
Ensure your bank details are updated and stay informed about the assistance available to you throughout 2025.
FAQs
How do I know if I’m eligible for the £500 payment?
If you were receiving Working Tax Credit or Child Tax Credit on 2 March 2021, you will automatically be contacted by HMRC. No application is required.
When will the payments be made?
The payment will be made directly to your bank account. Ensure your details are up to date with the DWP to avoid delays.
What can I use the £500 payment for?
You can use the payment to cover essential expenses such as rent, utility bills, groceries, school fees, and more.