The Benefit Cap is part of government welfare reforms that place a limit
on the amount of benefit you can get if you're of working age.
Some people will get less benefit than before, although this will only affect you if you're getting Housing Benefit. Some people won't be affected by the cap at all, for example, if you qualify for Working Tax Credit or you're on some disability benefits.
•In his July 2015 Budget the Chancellor announced a lowering of the Benefit Cap to £23,000 in London and £20,000 elsewhere (see below).
Your housing benefit will be less and you may need to plan for this.
How the Cap May Effect You
If your combined income from certain benefits is more than the cap, your Housing Benefit will be cut. If you don't get enough Housing Benefit, the cap won't be applied in full. However some people may lose all of their Housing Benefit, except for 50p a week, which will continue to be paid. The level of the cap will be:
- £500 a week if you're in a couple, with or without dependent children
- £500 a week if you're a single parent
- £350 a week if you're a single adult and don't have children or have children who don't live with you.
Changes to the benefit cap
On July 8 2015 the government announced reductions to the benefit cap. The total amount a household will be able to claim in benefits is:
- £442 a week in London
- £385 a week outside London
These changes will take effect from April 2016.
Benefits the Cap Will Include
The cap will apply to your household income from most benefits, including Child Tax Credit. The cap will apply to your combined income from:
- Bereavement Allowance
- Carer's Allowance
- Child Benefit
- Child Tax Credit
- Employment and Support Allowance, except where it is paid with the support component
- Guardian's Allowance
- Housing Benefit
- Incapacity Benefit
- Income support
- Jobseeker's Allowance
- Maternity Allowance
- Severe Disablement Allowance
- Widowed Parent's Allowance
- Widowed Mother's Allowance
- Widow's Pension.
A household means you and your partner, if you have one, and any children you are responsible for and who live with you.
Your income from benefits will be taken into account before any deductions, for example, for recovery of overpayments or payments for fuel arrears.
Any income from non-dependants living with you, such as adult children, won't count.
Who won't be affected
The cap will not apply to you if you qualify for Working Tax Credit or if you or a member of your household gets any of the following benefits:
- Disability Living Allowance -
- Attendance Allowance
- Personal Independence Payment
- the support component of Employment and Support Allowance
- Industrial Injuries Benefits
- War Widow's or War Widower's Pension
- Armed Forces Compensation Scheme payments.
If you've been working for at least a year and then lose your job through no fault of your own, your benefits won't be capped for the first nine months.
Benefits not counted for the Cap
There are some benefits which won't be counted when working out whether your benefit income is over the cap.
- Council Tax Benefit or the replacement local support for Council Tax
- Discretionary Housing Payments
- Pension Credit
- State Retirement Pension
- Statutory Adoption Pay, Statutory Maternity Pay and Statutory Paternity Pay (paid by employers)
- Statutory Sick Pay (paid by employers)
- one off payments, for example, Social Fund loans
- non-cash benefits, for example, free school meals.
If you are at risk of being capped
If the Department for Work and Pensions (DWP) thinks you are at risk of being capped, based on your current circumstances, they will write to you to explain this. Bear in mind the DWP may not have the most up-to-date information about you when they write to you. Your circumstances may also change between after April 2013.
The DWP has set up a Helpline to help answer questions about the cap. The number is 0845 605 7064 (8am to 6pm) or textphone 0845 608 8551 for people with hearing or speech impairments. However, the Helpline will only be able to signpost you to your local authority for housing options advice, or to Jobcentre Plus for help in finding work. They won't be able to tell you about how much benefit you are getting or how much you will lose. They can signpost you to the benefit enquiry line to find how much you are currently getting.
Check how much benefit you are entitled to now to find out how much Housing Benefit you are likely to lose when the cap is applied next year. This may affect which options you need to consider. An online calculator is available on the Directgov website at www.dwpe-services.direct.gov.uk. You can use this to estimate how much Housing Benefit you will lose if your total benefit income is more than the cap.
Consider whether your circumstances are likely to change after April 2013. For example, do you have a child who will soon be treated as financially independent of you? When this happens, your benefits may go down, which may bring you under the limit of the cap or mean that you are less affected by the cap.
On the other hand if, for example, you're expecting a baby, your benefits may go up. This could push you over the limit of the cap.
You may need to consider one of the following options:
- can you or your partner get work, or increase your hours of work, so that you can claim Working Tax Credit? This would mean the cap would not apply to you
- can anybody in your household get one of the benefits that mean that the cap won't apply to you, or that some of your benefits won't be counted?
- can you move to cheaper accommodation or negotiate a rent reduction with your landlord?
What you can do if you are capped
- apply for a Discretionary Housing Payment from your council. If you can get one, this may help in the short term to pay your rent, or pay for a deposit or removal expenses to help you move to cheaper accommodation
- if you have a disabled child or a child whose health or development is likely to be damaged because of the reduction in your benefit, contact your council's Children's Services Department. They may be able to help with a cash payment or other assistance