A new £15 billion package of targeted government support has been announced to help with the rising cost of living.
The package is in addition to the over £22 billion announced previously, with government support for the cost of living now totalling over £37 billion this year.
A new 25% Energy Profits Levy is being introduced for oil and gas companies to help fund the additional support.
The new Cost of Living Support package means that almost all of the eight million most vulnerable households will receive at least £1,200 of extra support this year.
The package includes
– A new, one-off £650 payment to more than 8 million low-income households on Universal Credit, Tax Credits, Pension Credit and legacy benefits. The payment will be in two lump sums, the first from July and the second in the autumn;
– Separate one-off payments of £300 to pensioner households to help with the rising cost of energy this winter;
– £150 to individuals receiving disability benefits in September. For the disability benefit recipients that receive means tested benefits, this £150 will come on top of the £650 they will receive separately; and
– The Energy Bill Support Scheme discount, which is due to come into effect from October, is being doubled from £200 to £400. The full £400 will now be a grant, with no requirement to pay it back. Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher.
Energy Profits Levy
The new Energy Profits Levy will be charged on oil and gas company profits at a rate of 25% and is expected to raise around £5billion in its first twelve months.
The Levy includes a generous Investment Allowance which is similar in style to the super-deduction. It will incentivise the oil and gas sector to reinvest their profits in oil and gas extraction in the UK, saving them 91p for every £1 they invest. This nearly doubles the tax relief available and means the more a company invests, the less tax they will pay.