A temporary uplift in working tax credit payments came to an end this month, after the government scrapped the support in favour of a one-off payment instead.
Households who have received a Covid boost since the start of the pandemic, will see their usual payments fall, in exchange for a £500 payment on April 23.
On March 3, Rishi Sunak bowed to pressure to maintain the £20 a week Universal Credit uplift for those facing financial hardship, but said due to operational factors, households in receipt of working tax credits would receive an alternative payment from April.
The Chancellor said working tax credit claimants would receive a one-off payment of £500 instead of the £80 a month boost.
The new payment will replace the temporary increase in working tax credits which ended as planned on April 5.
"To support low-income households, the Universal Credit uplift of £20 a week will continue for a further six months," Sunak told The Commons.
The extension of the Universal Credit uplift means that claimants will receive an extra £20 a week between April 1 and September 30 on top of the standard allowance, which will rise to £324.84 a month for a single person.
For working tax credit claimants, the money will be paid as a single sum.
"We'll provide working tax credit claimants with equivalent support for the next six months," he added.
"And because of the way that system works operationally, we will need to do so with a one-off payment of £500."
The two measures are together expected to cost a total of £3billion, with the payments set to be issued April 23.
Who qualifies for the £500 payment?
Most people on benefits now receive Universal Credit instead of tax credits - however, with the complete switchover is not expected to complete until 2024, millions of people still claim the legacy benefit.
This includes those in receipt of the severe disability premium.
You do not need to apply for the support. HMRC says it will contact you by text message or letter in April to confirm you are eligible.
It's available to those who, on March 2, 2021, received:
- Working tax credit payments
- both working tax credit and child tax credit payments
- Child tax credit payments and are eligible for working tax credit but do not get a payment because their income is too high
If you are eligible, you should receive your payment by April 23, 2021.
