The UK government has introduced a one-time £500 support payment for 2025, offering much-needed financial relief to households previously reliant on Tax Credits, especially Working Tax Credit.
This initiative targets working families who were affected by the withdrawal of the temporary £20 per week increase in Working Tax Credit during the COVID-19 pandemic.
This £500 payment is tax-free, and families will receive it directly into their bank accounts, without the need to apply.
It is designed to alleviate financial pressure as the cost of living continues to rise in 2025. Here’s what you need to know about the payment, eligibility, and how to claim.
Overview of the £500 One-Off Support Payment
The one-time payment was introduced as a short-term measure to compensate for the removal of the £20 per week increase in Working Tax Credit that was implemented during the pandemic.
Many households faced a financial strain due to the cessation of this temporary benefit, especially those who were just above the qualifying income threshold and no longer received Tax Credit support.
This payment is designed to fill the gap, providing financial relief to those who missed out on continued aid.
| Payment Type | Timeframe | Amount | Purpose |
|---|---|---|---|
| One-Off Support Payment | Throughout 2025 | £500 | Financial assistance for former Tax Credit recipients |
| Cost of Living – Phase 1 | March–May 2025 | £301 | Help with recovery from winter energy and household costs |
| Cost of Living – Phase 2 | July–August 2025 | Up to £200 | Support for summer utility and childcare expenses |
| Cost of Living – Phase 3 | October–December 2025 | £500 | Support for winter holidays and seasonal essentials |
Eligibility Criteria
The eligibility for this payment is straightforward and relies primarily on your past receipt of Working Tax Credit or Child Tax Credit. Here are the details on who qualifies:
- Working Tax Credit recipients as of March 2, 2021.
- Families who received Child Tax Credit but did not qualify for Working Tax Credit due to slightly higher income levels.
If you qualify, HMRC (Her Majesty’s Revenue and Customs) will reach out to you directly, either by letter or text message, to confirm your eligibility.
There is no need for you to apply separately. The payment will be made to the bank account linked to your original Tax Credit claim.
What Can You Use the £500 For?
The £500 payment is designed to be used as needed by households to cover essential expenses. Here are some suggested ways you can spend the payment:
- Rent or mortgage payments
- Utility bills such as electricity, gas, and water
- Groceries and other household essentials
- School fees or purchasing children’s uniforms
- Winter clothing or heating appliances
This lump sum is not a loan, so there’s no need to repay it. The government encourages recipients to use the money for their most immediate and necessary needs.
Additional Cost of Living Payments in 2025
In addition to the one-off £500 support, the UK government has also introduced phased Cost of Living Payments throughout 2025 to help households manage the ongoing financial challenges caused by inflation and economic uncertainty.
Breakdown of Additional Payments:
- Phase 1 (March–May 2025):
A £301 payment will be made to help families recover from higher winter energy bills and other essential costs during the cold months. - Phase 2 (July–August 2025):
A payment of up to £200 will assist with summer costs, including childcare and cooling expenses. - Phase 3 (October–December 2025):
A final payment of £500 will be made to provide financial relief for winter holidays and seasonal essentials.
How Will the £500 Be Paid?
The £500 payment will be directly transferred to the same bank account that was used for your previous Tax Credit claims.
If you believe you are eligible but have not received the payment, you should contact HMRC or DWP support services to verify your details.
Key Actions to Take:
- Ensure your bank account details are up to date with HMRC.
- If you haven’t received the payment by July 2025, get in touch with the relevant authorities to ensure your eligibility and payment status.
The £500 One-Off Support Payment in the UK for 2025 offers essential relief to households affected by the end of the temporary Tax Credit increase.
Families who previously qualified for Working Tax Credit or Child Tax Credit will automatically receive the payment.
FAQs
Who is eligible for the £500 One-Off Support Payment?
Eligibility is based on past receipt of Working Tax Credit or Child Tax Credit on March 2, 2021. HMRC will contact you if you qualify.
How will the £500 payment be paid?
The payment will be directly deposited into the same bank account linked to your original Tax Credit claim.
Can the £500 payment be used for any purpose?
Yes, the payment can be used for essential expenses, including rent, utilities, food, and other household needs.