£350 payment to help with rising living costs

The UK Government is offering up to £350 per household to help with the rising cost of living, and especially energy price rises. Learn more about this financial support package and why you will have to pay £200 back here.

Why are energy prices going up?

Energy prices will increase from April 2022 because the energy price cap is set to rise significantly. The price cap is the maximum amount that an energy company can charge for a unit of energy and the maximum amount they can set as the standing charge or day rate.

An energy price cap does not mean there is a maximum energy bill. It simply means there is a maximum amount the company can charge for a unit of energy, and the more you use the more your bill will be.

How much more will you have to pay?

Industry analysts state that the average energy bill per year is £1,277, and they expect the energy price cap increase will cause bills to increase by 50% per annum. This means the average household can expect to pay over £600 extra on energy bills than they currently do.

Other reasons the cost of living is increasing

Rising energy bills are not the only reason why living costs are going up. The rate of inflation is projected to reach almost 6% sometime in 2022 unless the Bank of England can somehow put the brakes on. Additionally, workers will be contributing more of their salary to National Insurance as part of the government’s new Health and Social Care Fund.

£350 payment to help with living costs

Following the energy price cap increase and overall increases in the cost of living, the UK Government has announced up to £350 payments for each household. This is split into two payments of a £200 Energy Bill Rebate and a £150 Council Tax Rebate.

The £200 payment will be available to all households that pay for their electricity. The £150 payment will come in the form of a Council Tax Rebate and will be available to all properties in Council Tax bands A, B, C and D. This will mean an estimated 80% of all households will qualify for the £150 Council Tax rebate.

However, energy customers will be required to pay back the £200 payment. They will repay £40 per year starting from 2023 when wholesale gas prices are expected to fall. The £150 Council Tax Rebate will not need to be repaid in the future.

There will also be discretionary funding made available to vulnerable and low-income households that do not pay Council Tax or those that do pay Council Tax in bands E, F, G, and H.

Other ways to combat the cost of living

Households will be looking for ways to combat the rise in living expenses over the immediate future, and one way of doing that is to secure a better mortgage deal. You may want to look into remortgaging for a lower interest rate and securing a fixed rate for a set duration. Euxton Mortgage advisers can help you search the market with confidence!

Feburary 2022