More than eight million households will receive a £326 cash boost this week.

The payment is the first of two designed to ease cost-of-living pressures.

From Thursday, a first instalment of £326 will start to be paid out to low-income households on benefits, the Department for Work and Pensions (DWP) previously announced.

The second payment of £324 will follow in the autumn.

How to reduce your energy bills as prices increase

People may be entitled to receive the £650 in two lump sums if they receive certain support, such as Universal Credit, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), Income Support, Pension Credit, Child Tax Credit or Working Tax Credit.

Those eligible will be paid automatically, so they do not need to apply and payments may appear in accounts as “DWP Cost of Living”.

The DWP and HM Revenue and Customs (HMRC) have been identifying those eligible to receive a cost-of-living payment.

Many people will receive the first instalment between July 14 and 31, although for those receiving Tax Credits, the first payment is to be made from the autumn and the second from winter 2022.

Pensioner households will also receive an extra £300 to help cover the rising cost of energy this winter, while people on disability benefits will receive an extra £150 payment in September.

From October, households will also have £400 taken off energy bills.

People may also see an income boost in their pay packets this month, as national insurance (NI) starting thresholds increased from £9,880 to £12,570 from July 6.

However, this was after a 1.25 percentage point increase in NI in April, to help pay for health and social care.

Households have been warned to expect to see energy bills soar further in the coming months.

Experts at Cornwall Insight said bills could rise from a current record of £1,971, to £3,245 in October and then further to £3,364 at the start of next year.

The forecasts are based on what an average household will spend on gas and electricity in a year. A household that buys more energy could see higher bills.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the cost-of living payments are “a vital step in the right direction for those on lower incomes”.

But she added: “It’s not enough to put people back where they were before price hikes.”

The Office for Budget Responsibility (OBR) said last week that geopolitical tensions, soaring energy costs and long-term pressure on the nation’s finances from an ageing population “add up to a challenging outlook for this and future governments as they steer the public finances through inevitable future shocks”.

Your Money Matters is a campaign launched by us and our sister titles across Newsquest to help you overcome the surge in the cost of living. This year has seen a whole host of household price increases - from the energy price cap rise to surging inflation and food prices - costing your family hundreds or even thousands of pounds extra per year. We're making it our mission to look out for your cash, offering money-saving deals, competitions, giveaways and insightful stories from your community on the impact this cost of living crisis is having on our readers. The worldwide energy crisis exacerbated by the Ukraine invasion, the financial impact of the Covid pandemic, record inflation figures and a surge in the cost of goods, fuel and travel means we will all feel the pinch. Through our newspaper, we want to do what we can to help make your cash go further because we know your money matters.

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