The UK Government is once again stepping forward to support households struggling with high living expenses. Starting August 2025, a new £250 Cost of Living Credit will be issued to eligible residents. This financial aid is part of an extended government initiative designed to help people manage the continued rise in food, energy, and housing costs across the country. Here’s everything you need to know about this new credit – including eligibility, payment dates, and how to claim.
What is the £250 Cost of Living Credit?
The £250 Cost of Living Credit is a one-off, non-taxable payment from the UK Government designed to support low-income households. It follows previous cost-of-living measures that were introduced between 2022 and 2024, and comes in response to ongoing inflationary pressure, especially on essentials like groceries and utilities.
Unlike previous schemes, this credit is being rolled out automatically to qualifying individuals without the need for a new application.
Why This Payment is Being Introduced
The decision to issue this new credit comes after recent government data revealed that over 6 million households in the UK are still experiencing financial stress. Inflation rates remain volatile, and while wages have seen modest growth, household purchasing power remains low for many.
This £250 support aims to offer short-term relief for essentials during the late summer period, particularly for families who may face extra expenses ahead of the autumn and winter months.
Who is Eligible?
Eligibility for the £250 Cost of Living Credit is based on specific criteria set by the Department for Work and Pensions (DWP). The following groups are expected to qualify:
Universal Credit Recipients
If you are receiving Universal Credit and were entitled to a payment between 1st July 2025 and 31st July 2025, you will automatically be eligible for this support credit.
Pension Credit Claimants
People who are currently receiving Pension Credit – whether Guaranteed or Savings Credit – will also qualify, provided their entitlement was active during the same qualifying period.
Legacy Benefit Recipients
Those on legacy benefits such as Income Support, Jobseeker’s Allowance (JSA), or Employment and Support Allowance (ESA) will be included if their payment period falls within July 2025.
Tax Credit Households
Households receiving Working Tax Credit or Child Tax Credit may also be eligible, though in most cases, their payment may come a few weeks after those receiving other benefits.
When Will the £250 Payment Be Made?
The government has confirmed that the payments will begin in phases from 12th August 2025. Here’s a general breakdown of the expected timeline:
Universal Credit and Pension Credit
Those receiving Universal Credit or Pension Credit can expect their payment to arrive between 12th August and 20th August 2025.
Legacy Benefits
Recipients of Income Support, JSA, or ESA will receive payments between 21st August and 28th August 2025, directly into the same bank account where they receive their usual benefits.
Tax Credit Recipients
Households on Tax Credits only will likely receive their £250 credit between 29th August and 5th September 2025.
These dates are subject to slight changes based on banking schedules or holidays, but the DWP has confirmed that all payments should be completed by early September.
Do You Need to Apply?
No, there is no need to apply for this credit. Payments will be processed automatically by HMRC or DWP, depending on the benefit you currently receive.
However, it is crucial that your contact and banking information is up-to-date to avoid delays. If you have recently changed your bank account or address, you should notify DWP or HMRC immediately.
How Will You Receive the Payment?
The payment will be sent directly to your bank account. It will show up with a reference similar to “DWP COL CREDIT” or “HMRC COL PAYMENT”, depending on the department handling your benefits.
It is important to check your bank statement regularly during the payment window to confirm you’ve received the support.
What If You Don’t Receive the Payment?
If you believe you were eligible but do not receive the payment by 10th September 2025, you are advised to:
- Contact DWP or HMRC (depending on your benefit)
- Double-check your eligibility and benefit entitlement dates
- Ensure your bank details were correctly submitted
A dedicated helpline will be made available on GOV.UK by late August to assist with payment queries.
Can It Affect Other Benefits?
No, the £250 Cost of Living Credit will not affect your existing benefits or tax status. It is a non-taxable, separate support payment and does not count as income for the purposes of Universal Credit or any other means-tested benefit.
This makes it safe and helpful for families who are already on limited income and may be concerned about benefit reductions.
What Can You Use This Payment For?
The government has stated that this is an unrestricted payment, meaning recipients can use it for any essential living expenses, such as:
- Energy and utility bills
- Grocery shopping
- Rent or housing expenses
- Childcare or school supplies
- Transportation
However, officials strongly encourage using the credit wisely, especially as colder months and higher utility costs approach.
Additional Support Available
Apart from the £250 credit, some households may also be eligible for extra help through local councils or discretionary housing payments. If you’re struggling with rent arrears or facing eviction, your local authority may have emergency funding still available under the Household Support Fund, which has been extended until October 2025.
Tips to Prepare
To make sure you’re ready to receive your payment:
- Review your benefit statements for July 2025
- Make sure your bank details are correct and active
- Keep an eye on official GOV.UK announcements for updates
- Check with your local council for any additional support schemes
- Plan your spending in advance to stretch your payment longer
Government’s Statement
In a recent briefing, the Department for Work and Pensions said:
“We understand that many UK households are still under significant financial pressure. The £250 credit is part of our ongoing commitment to ensuring people have support during difficult times.”
The statement also emphasised that more long-term solutions are being reviewed, including changes to benefit uprating and housing support caps.
Final Thoughts
This £250 Cost of Living Credit might not solve every financial challenge, but for many UK households, it will offer some much-needed relief. Whether it helps to cover rising grocery bills, energy charges, or unexpected expenses, it’s a step in the right direction by the government.
If you’re receiving benefits or on a fixed income, be sure to check your eligibility, monitor your bank account, and stay informed through official channels. Every bit of support counts — and this one could help ease your burden this August.
