A vital new support measure is on its way for low-income households across the UK. The government has announced a £250 Cost of Living Payment, aimed at easing financial pressure amid rising prices for food, energy, and essentials. Scheduled for May 2025, this one-off, tax-free payment will be distributed automatically to eligible recipients.
Here’s everything you need to know about the payment, including eligibility criteria, payment timelines, and tips to maximize its impact on your household budget.
Overview: What Is the £250 Cost of Living Payment?
| Feature | Details |
|---|---|
| Amount | £250 (one-time, tax-free) |
| Payment Window | Between 6 May and 22 May 2025 |
| Eligibility | Based on receiving certain income-related benefits |
| Automatic Payment | Yes, paid directly into your usual bank account |
| Reference Code | “DWP COL” (for DWP payments) or “HMRC COLS” (for tax credit recipients) |
| Application Needed | No – You do not need to apply |
| Extra Support | £150 Disability Payment, Winter Fuel Payment, Household Support Fund |
Why This Support Is Needed
The UK continues to face economic strain. According to the Office for National Statistics, key cost-of-living drivers have risen dramatically:
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Food prices have surged over 25% since 2021
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Energy bills jumped by over 50% in some areas during 2023
To cushion these financial blows, the UK government is delivering this new £250 Cost of Living Payment, building on earlier support schemes offered from 2022 to 2024.
Who Is Eligible?
You qualify if you were receiving any of the following income-related benefits during the designated qualifying period (typically a few weeks prior to 6 May 2025):
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Universal Credit
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Income-based Jobseeker’s Allowance (JSA)
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Income-related Employment and Support Allowance (ESA)
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Income Support
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Working Tax Credit
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Child Tax Credit
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Pension Credit
Not Eligible If:
You only receive:
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New Style ESA
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New Style JSA
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Contribution-based benefits (without a qualifying income-related benefit)
How and When Will the Payment Be Made?
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Payment Dates: Between 6 May and 22 May 2025
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Method: Direct bank deposit
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Reference Code:
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“DWP COL” if paid by the Department for Work and Pensions
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“HMRC COLS” if paid by HMRC for tax credit claimants
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✅ No application is needed — you will receive it automatically if you qualify.
Stay Alert for Scams
Government departments like DWP and HMRC will never ask you for:
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Bank details
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Personal information via text, email, or phone
If in doubt, visit GOV.UK directly or contact your benefits advisor.
Smart Ways to Use the £250 Payment
Here are practical ideas to make the most of this one-off financial boost:
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Pay Utility Arrears: Clear or reduce past-due gas/electricity bills.
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Stock Up: Purchase non-perishable groceries and essentials in bulk.
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Emergency Fund: Set aside funds for unexpected repairs or health needs.
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Energy Efficiency: Invest in insulation, draught-proofing, or energy-efficient appliances.
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School Supplies: Buy uniforms and supplies early to save later.
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Prepare for Winter: Top up energy accounts ahead of the cold season.
Case Study: How One Family Benefited
Sarah, a single mother in Manchester, received the previous Cost of Living boost in 2024. Here’s how she used it:
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£150 to pay down an electric bill
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£50 for early-bird school uniform deals
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£50 saved for Christmas shopping
“That payment helped me breathe a little easier. I felt like I had options again,” she said.
Additional Support to Explore
Beyond the £250 payment, you may also qualify for:
🟩 £150 Disability Cost of Living Payment
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For people on disability-related benefits like PIP or DLA
🟩 Winter Fuel Payment
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£150–£300 for pensioners to assist with heating costs
🟩 Household Support Fund
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Administered by local councils
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Offers food, clothing, and utility assistance
Frequently Asked Questions (FAQs)
Q1: What if I start receiving benefits after the qualifying period?
❌ You won’t be eligible for the £250 payment unless you were receiving a qualifying benefit during the specified period.
Q2: Will the £250 affect my existing benefits or tax credits?
✅ No. The payment is non-taxable and does not affect your eligibility for other benefits.
Q3: I didn’t receive my payment by 22 May 2025. What should I do?
☎️ Contact DWP (if you’re on Universal Credit or ESA) or HMRC (if you’re on tax credits).
Q4: Can I opt out of receiving the payment?
📝 No official opt-out exists. However, you may choose to donate the funds to a charity or support organization.
What Should You Do Next?
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✅ Check Eligibility: Ensure you’re receiving qualifying benefits.
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🧾 Keep Records: Make sure your contact and bank details with DWP/HMRC are current.
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🔍 Track Your Payment: Monitor your bank account for the reference codes during the payment window.
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📚 Explore Further Help: Contact your local council or Citizens Advice for more tailored assistance.
Final Thoughts
The £250 Cost of Living Payment is a critical lifeline for many in the UK, offering timely relief during tough economic times. While it may not solve every financial challenge, using it strategically can alleviate short-term pressure and help plan for the months ahead.
Keep yourself informed, take advantage of related support schemes, and remember — help is available. For more details, visit GOV.UK Cost of Living Support.
