Great Homes

Great Neighbourhoods

Great People

-A A +A

The 'Benefit Cap'

The Benefit Cap limits the overall amount of welfare benefits a ‘working age’ household can receive. It does not affect you if:

  • you or your partner (and in some circumstances a dependent child) are getting certain benefits, or
  • you (or your partner) are Pension Credit age – unless you are getting Universal Credit, Income Based JSA or Income Support or Income Related ESA.

If you are a lone parent with a child/children under 2 who is affected by the Benefit Cap, a High Court ruling might affect you in the future. In June 2017, the High Court ruled that Benefit Cap with regards to lone parents with children under 2 is unlawful. The DWP is appealing this ruling and have said that the current rules will remain in place until the appeal. If the DWP is not successful, the regulations may be changed. Depending on the ruling, it may help you if you have already registered an appeal about the application of the Benefit Cap to your Housing Benefit or Universal Credit claim. Contact us for further advice.

 

Here’s some information on the Benefit Cap, firstly for people on Housing Benefit, then for those on Universal Credit.
 

Benefit Cap for people on Housing Benefit

Who won’t be affected by the Cap?

The Benefit Cap does not apply to you if:

  • You or your partner are Pension Credit Age (unless you are getting Universal Credit, Income Based JSA or Income Support or Income Related ESA)
  • You or your partner have claimed and are entitled to claim, Working Tax Credit
  • You, your partner, or a child or young person for whom you get Child Benefit, gets Disability Living Allowance, Personal Independence Payment or Armed Forces Independent Payment.
  • You or your partner are in the ‘support group’ of Employment Support Allowance
  • You or your partner receive (or have an underlying entitlement to) Carer’s Allowance
  • You or your partner receive Guardian’s Allowance
  • You or your partner get Industrial Injuries Disablement Benefit.
  • You or your partner get a War Disablement Pension, Armed Forces Compensation Scheme payment, or a War Widows’/Widowers’ Pension.
  • You (or you and your partner) are out of work but had been in work for at least 50 out of the 52 weeks before – this “grace period” lasts 9 months.

 

How do you work out if the Cap applies to you?

If you are of working age and not getting one of the benefits/in one of the situations that would exclude you from the Benefit Cap then the DWP will add together most of the benefits you are entitled to (including Child Benefit).

They will then compare this to the Benefit Cap limit that applies to you:

  • £384.62 per week for single parents.
  • £384.62 per week for couples with or without children.
  • £257.69 per week for single people without children.

If your total welfare is above this Cap limit you will be affected by the Benefit Cap.

When you add the benefits together do not include: Council Tax Support, Statutory Sick Pay, Statutory Maternity Pay, Bereavement Support Payment, Discretionary Housing Payments and Housing Benefit paid on ‘specified accommodation’ (ie certain supported housing – ask us if you’re not sure if this applies to you).

If the total amount of the benefits you (and your partner) are entitled to comes to more than the Benefit Cap limit your Housing Benefit payments will be reduced. If this would mean losing all your Housing Benefit, you still have to be given 50p a week. This means that you can still try for a Discretionary Housing Payment.

It is only your Housing Benefit that can be reduced due to the Cap – although 50p a week must be left in payment. But if you receive Universal Credit then the whole of your Universal Credit award can be reduced due to the cap.

 

Examples:

Julie and Nick have three children age 11, 8 and 4. Nick is currently unable to work following a car accident that has left him with back and leg injuries. They pay £100 per week rent for their 3 bedroom house. They live in Greater Manchester.

They are claiming the following benefits:

Child Benefit                 £48.10 per week
Child Tax Credit            £170.87 per week
Income Related ESA    £143.90 per week
Housing Benefit            £100 per week

Total “welfare”               £462.87 per week.

The Benefit Cap limit which applies to them is £384.62 per week.

Their ‘excess’ income is £78.25 (£462.87 minus £384.62 = £78.25).

So their Housing Benefit will be reduced by £78.25 – they will receive £21.75 per week. They will have to pay the remainder of their rent out of their other benefits.

 

Alison lives in Nottingham. She is a single parent with three children age 15, 13 and 10. She is looking for work and is claiming Jobseeker’s Allowance. She pays £110 per week rent for their 3 bedroom house.

Alison is claiming the following benefits:

Child Benefit                 £48.10 per week
Child Tax Credit            £170.87 per week
Income Based JSA       £73.10 per week
Housing Benefit            £110 per week

Total “welfare”              £402.07 per week.

The Benefit Cap limit which applies to Alison is £384.62 per week.

Her ‘excess’ income is £17.45 (£402.07 minus £384.62 = £17.45).

So her Housing Benefit will be reduced by £17.45 – she will receive £92.55 per week. She will have to pay the remainder of the rent out of her other benefits.

Get more information about the cap on benefits by calling the Government’s Benefit Cap information line on 0845 605 7064. For the government’s Benefit Cap calculator go to this link: https://www.gov.uk/benefit-cap-calculator.
 

Benefit Cap for people on Universal Credit

Who won’t be affected by the Cap?

The Benefit Cap does not apply to you:

  • In any months in which you or your partner have earned income of £520 or more.
  • If you, your partner, or a child or young person for whom you get Child Benefit, gets Disability Living Allowance, Personal Independence Payment or Armed Forces Independent Payment.
  • If you or your partner are regarded as “having a limited capability for work-related activity”.
  • If you or your partner get Industrial Injuries Disablement Benefit.
  • If you or your partner get a War Disablement Pension, Armed Forces Compensation Scheme payment, or a War Widows’/Widowers’ Pension.
  • If you are entitled to Carer’s Allowance or a Carer Element in your Universal Credit award
  • If you get Guardian’s Allowance
  • If you (or you and your partner) are out of work but had been in work continuously for over 12 months before losing the job and you or your partner (or if you were both working, between the two of you) have earned at least £430 net or more in each of these monthly assessment periods which started before 1st April 2017 or had earned income of £520 or more in any monthly assessment periods which started on or after 1st April 2017 onwards – you will be protected for a “grace period” of 9 months.

 

How do you work out if the Cap applies?

If you are of working age and not getting one of the benefits / in one of the situations that would exclude you from the Benefit Cap then the DWP will add together most of the benefits you are entitled to (including Child Benefit).

They will then compare this to the Benefit Cap limit that applies to you:

  • £1666.67 per month for single parents.
  • £1666.67 per month for couples with or without children.
  • £1116.67 per month for single people without children.

If your total welfare is above this Cap limit you will be affected by the Benefit Cap.

When you add the benefits together do not include: any Child Care Cost Element of the Universal Credit award, Council Tax Support, Statutory Sick Pay, Statutory Maternity Pay, Bereavement Support Payment, Discretionary Housing Payments and Housing Benefit paid on ‘specified accommodation’ (i.e. certain supported housing – ask us of you’re not sure if this applies to you).

If the total amount of the benefits – including any Universal Credit - you (and your partner) are entitled to is more than the Benefit Cap limit that applies in any monthly assessment period then your Universal Credit payments will be reduced for that month. If you are struggling to pay your rent because of the Cap then you might be able to get a Discretionary Housing Payment to help you. Contact us for advice.

 

Example:

Mahia and Para have 6 children aged 17, 14, 10, 7 and twins aged 3. They have had difficulty finding work, and their rent is £128.00 per week (which works out at £554.67 per month). They live in (add here a local area you cover).

They are entitled to:

Child Benefit                £386.53 per month
Universal Credit          £2488.99 per month

Total “welfare”             £2875.52 per month.

As their total welfare income is £1,208.85 over their Benefit Cap of £1,666.67 per month, their Universal Credit will be reduced by £1,208.85 to £1,280.14, so they will need to pay for their rent, food, bills etc. out of their reduced Universal Credit and their Child Benefit.

Shaun lives in Ashton-Under-Lyne. He is a single parent with three children age 11, 9 and 7. He is looking for work. His rent is £110 per week rent for their 3 bedroom house.

Shaun is entitled to:

Child Benefit               £208.43 per month
Universal Credit          £1,534.91 per month

Total “welfare”           £1,743.34 per month.

The Benefit Cap limit which applies to Shaun is £1,666.67 per month.

His ‘excess’ income is £76.67 (£1,743.34 minus £1,666.67 = £76.67).

So his Universal Credit will be reduced by £76.67 – he will receive £1458.24 per month.

For the government’s Benefit Cap calculator go to this link: https://www.gov.uk/benefit-cap-calculator.

© 2017 Housing Systems Ltd

Find out more - take a look at our benefit cap FAQs.