As we head into the New Year, a number of benefits and money changes will take effect. The finance updates come as latest Consumer Price Index measure of inflation has been recorded at 2.6 per cent for November 2024, up from 2.3 per cent in October, mostly due to the rising costs of petrol and second-hand cars.
Inflation is expected to rise to 2.8 per cent by the third quarter of 2025 before easing. The target rate for inflation is 2 per cent. Meanwhile, the Bank of England has kept interest rates at 4.75 per cent, with the next update due in February.
Several DWP and HMRC changes will apply in January 2025 and we have put together a full list below. It includes payment date amendments, the abolition of a PIP cash sum for those wanting mobility support, and the opening of a new scheme providing £200 payments to help with the cost of living.
READ MORE:
January: Attendance Allowance changeover
People who receive Attendance Allowance will begin to be automatically transferred to a new devolved benefit called Pension Age Disability Payment if they live in Scotland. Officials at Social Security Scotland have brought in the new replacement payment for people of State Pension age and over who are disabled or have a long-term health condition that means they need help or supervision.
It will be paid at a lower rate of £72.65 a week for those who need help or supervision either during the day or at night and a higher rate of £108.55 a week for those needing support all the time. The benefit opened for new applications in October and from January, those who are already claiming the DWP equivalent Attendance Allowance will automatically start to move over to the Scottish scheme.
January 1: DWP and HMRC benefit payment changes
Wednesday, January 1, is New Year’s Day, which is a bank holiday. Any benefits that would normally be due on this day will be moved so they go in on December 31 instead. This applies to the State Pension, Universal Credit, Personal Independence Payment, other DWP benefits, and also HMRC tax credits. Child Benefit shouldn’t be affected as it typically goes into accounts either on a Monday or Tuesday.
State Pension payments will only need to be brought forward if you normally receive your cash on a Wednesday. This applies to those whose National Insurance number ends with two digits between 40 and 59.
January 2: DWP and HMRC benefit payment changes
Thursday, January 2, is a bank holiday in Scotland so there will be further benefit changes for those north of the border. Anyone in Scotland who would normally get their payment (including the State Pension) on Thursday should receive it two days earlier on December 31 instead.
HMRC has indicated that tax credit payments due on Thursday, January 2, will be brought forward to December 31 for claimants everywhere, not just in Scotland. Only Universal Credit payments remain unchanged on this day and will go in on January 2 as usual, wherever you are in the UK.
January 3: PIP and DLA payment change
The New Vehicle Payment for people on PIP or other disability benefits who use the Motability organisation to get mobility support will end on January 3. This is a sum of £750 that was introduced to help people with the increasing price of new cars caused by global shortages. The £100 New Product Payment for those leasing scooters and powered wheelchairs is also being scrapped.
Motability vehicles are available to those on the higher-rate mobility components of PIP, Disability Allowance, Adult Disability Payment and Child Disability Payment in exchange for some or all of these disability elements. Those on the veterans’ benefits Armed Forces Independence Payment and War Pensioners’ Mobility Supplement can also qualify.
The organisation provides cars (including electric and wheelchair-accessible models), scooters, powered wheelchairs, and any necessary disability adaptations. These £750 or £100 payments can be sent to the dealership to help cover some or all of the cost of any required advance, or they can go straight into the benefit claimant’s account if they don’t need to pay any upfront charges.
January: Cold Weather Payments may be triggered
Snow has been forecast for the first week of January, which could trigger Cold Weather Payments of £25 for each spell of freezing weather.
The Met Office said: “New Year’s Day will begin with snow affecting parts of Northern Ireland, southern Scotland and northern England as an area of low pressure moves eastwards across the UK and encounters colder air. Locally, there could be accumulations of ten to 15cm of snowfall, with larger amounts over the higher hills, and with associated strong winds we could see drifting snow in some parts.”
Maps show a band of snow passing eastwards across Devon, Wales and the Midlands on Saturday, January 4. The West Midlands is also expected to see snow, with 2.8 inches forecast to fall on Sunday, January 5.
Any areas of England and Wales hit by wintry blasts could see Cold Weather Payments of £25 sent to eligible households. These are given out each time the temperature in any specific postcode is recorded as, or forecast to be, zero degrees Celsius or below for seven consecutive days. The Department for Work and Pensions says 4,116,000 people in England and Wales are potentially eligible for a Cold Weather Payment, including 1,165,000 people on Pension Credit.
Cold Weather Payments can be awarded to those who receive Universal Credit, Income Support, Pension Credit, Income-Based Jobseeker’s Allowance (JSA), Income-Related Employment and Support Allowance (ESA), or Support for Mortgage Interest. People on any of these qualifying benefits normally need to be receiving a pensioner or disability premium on top, have a disabled child, or a dependant child under the age of five.
January 22: £200 payment for cost of living launched
A new £200 payment to help thousands of households with the cost of living will be available from January 22. Dudley, in the West Midlands, will begin accepting applications for cash from its £2.6 million slice of the DWP’s Household Support Fund.
Dudley Council said: “Our application process will be made live on January 22 for borough residents of all ages to apply for a one-off single payment of £200. Anyone who has already received an award in this financial year will not be eligible.
“This could include help with energy, water, broadband and phone bills, as well as other essentials such as food, clothing, and hygiene products. The fund can also assist with transport-related costs such as car repairs, buying a bicycle or paying for fuel.”
January 29: Winter Fuel Payment deadline
The Department for Work and Pensions says that anyone who hasn’t received either a confirmation letter or their Winter Fuel Payment by Wednesday, January 29, can call to check if they are still due to get the heating support.
Around 1.5 million are expected to get the Winter Fuel Payment this year under its revised rules, which have restricted support to those receiving Pension Credit and some other low-income benefits. Most people who qualify for the £200-£300 payment usually get a letter in October or November before the cash is automatically deposited in their accounts in November or December.
Anyone who hasn’t had a letter or the payment in their account by January 29 should call the Winter Fuel Payment Centre on 0800 731 0160.
January 31: HMRC tax self-assessment deadline
The online deadline to file a tax return for the 2023-2024 tax year and pay any tax owed is January 31, 2025. Anyone who is unable to settle their tax bill in full can apply to clear it off in instalments and avoid late payment penalties.
HM Revenue and Customs offers a Time to Pay system so that those who owe less than £30,000 can set up a payment plan online, spreading the cost over up to 12 months. For taxpayers with larger tax bills, flexible arrangements can be made by contacting HMRC directly. More than 15,000 customers have already taken advantage of this system for the 2023 to 2024 tax year.
Andy Wood, an international tax adviser from Tax Natives, warned: “Last-minute filings can result in avoidable penalties and missed opportunities to arrange flexible payments. HMRC’s Time to Pay system is a fantastic tool for taxpayers needing extra breathing room. However, to take advantage of this, you must complete your self-assessment return first. Delaying this process could mean missing out on the chance to manage your payments in a way that suits your financial circumstances.
“The penalty for late filing is £100, which can increase significantly over time if the delay persists. Late payment penalties are also added to outstanding balances. By acting now, taxpayers can avoid these costs and take control of their financial commitment.”
He says HMRC has also made it easier than ever for people to settle their bills. Taxpayers can use the free HMRC app, the GOV.UK website, or traditional methods such as online banking, telephone banking, or debit or corporate credit cards.
Get breaking news on BirminghamLive WhatsApp. Join our dedicated community for the latest updates. You can find out more in our Money Saving Newsletter, which is sent out daily with all the updates you need to know on pensions, PIP, Universal Credit, benefits, finances, bills, and shopping discounts.