HMRC will give hundreds of thousands of households a £300 tax-free payment from today

HM Revenue and Customs (HMRC) will begin issuing these payments to eligible tax credit recipients between today and February 16.

More than seven million eligible UK households have already received the payment from the Department for Work and Pensions (DWP), which is distributing the money between February 6 and 22.

Those eligible via tax credits should see it on their bank statement with the code “HMRC COLS” as the payment reference.

The payment reference is the National Insurance number and “DWP COL” for those getting the payment via the DWP, such as eligible Universal Credit and Pension Credit recipients.

The cost of living payments are tax-free.

They don’t count towards the benefit cap and they won’t affect existing benefit awards.

Myrtle Lloyd, HMRC director general for customer services, said: “The £299 cost of living payment will deliver further financial support to eligible tax credits customers across the UK.

“To make things as simple as possible, the payment is made automatically with no action required from HMRC’s customers.”

HMRC is directing people who haven’t received the payment as they expected to wait until February 23 before they get in touch.

This allows time for their bank, building society or credit union to process the payment.

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The payment is made separately from the benefit payment.

Hundreds of thousands of pensioners on a low income could still qualify for the cost of living payment, despite the eligibility period having now ended.

This is due to Pension Credit backdating rules, which allow a claim to be backdated by up to three months.