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Millions of households across the UK are set to benefit from a new £500 Cost of Living Payment in 2025, confirmed by the Department for Work and Pensions (DWP). The one-off payment is aimed at helping some of the country’s most vulnerable groups cope with rising everyday expenses.
Why is the payment being introduced?
Although inflation has started to ease this year, the price of essentials such as food, rent, and energy remains much higher than before the pandemic. Many pensioners, disabled people, and families on low incomes continue to struggle with day-to-day bills.
To ease this pressure, the government has announced the new £500 boost as part of a wider package of financial support due in 2025.
Who will get the £500 Cost of Living Boost?
The payment will not go to everyone. Instead, it will be targeted at households already receiving certain benefits, including:
- Pensioners on Pension Credit or State Pension (with additional support).
- Disabled people on PIP (Personal Independence Payment) or DLA (Disability Living Allowance).
- Low-income families on Universal Credit, Income Support, or ESA (Employment and Support Allowance).
- Some carers on Carer’s Allowance, depending on their circumstances.
The government estimates that millions of households will qualify.
How much will people receive?
Each eligible household will receive a one-off payment of £500. This will be in addition to other support measures such as Winter Fuel Payments, Pensioner Cost of Living Payments, or Disability Support Payments.
Importantly, people will not need to apply separately the DWP has confirmed payments will be made automatically into bank accounts.
When will the money be paid?
Exact dates have not yet been confirmed, but based on previous schemes, the payment is expected to be delivered in two phases:
- Spring 2025 – the first round of payments.
- Autumn 2025 – a second rollout for certain groups, such as pensioners and disabled people.
The money will arrive in the same way as benefits and pensions are usually paid.
What if you don’t currently receive benefits?
If you are not claiming benefits, you won’t automatically qualify. However, the DWP is urging people particularly pensioners to check whether they could be entitled to Pension Credit. This benefit is often underclaimed, and applying in time could make the difference between receiving the £500 or missing out.
Why Pension Credit matters
Pension Credit not only tops up retirement income but also unlocks access to other help, including:
- Free NHS dental treatment
- Warm Home Discount
- Council tax support
- Free TV licences for over-75s
Qualifying for Pension Credit before the DWP’s reference date would also make pensioners eligible for the £500 boost.
How will the payment help?
While £500 may not cover months of bills, it can make a meaningful difference for struggling families. Many will use the money to:
- Catch up on overdue bills
- Pay for heating through winter
- Cover childcare or food costs
- Reduce reliance on credit or loans
Charities have welcomed the move but stress that longer-term solutions are still needed to address the cost of living crisis.
Beware of scams
The DWP has warned of potential fraud attempts. People should be cautious of texts, phone calls, or emails asking for personal details. The department will never ask you to apply for this payment or share bank information. All payments will be automatic.
Final word
The £500 Cost of Living Payment is set to provide much-needed relief to millions of pensioners, disabled people, carers, and low-income families in 2025. If you already receive qualifying benefits, the money will arrive automatically. If not, now is the time to check if you’re entitled to Pension Credit or other support, so you don’t miss out.
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