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Benefit cap

Benefit cap

Frequently asked questions



From April 2013, there will be a maximum amount of benefit that a household, defined as an individual, their partner, and any children they are responsible for and who live with them, can be entitled to.

As part of the Welfare Reform Act, from 2013 the Government will introduce a cap on the total amount of benefit that working-age people can receive.

This will help ensure individuals are no longer given more money when they are out of work than what they could reasonably expect to earn from working.

The benefits that will be taken into account when calculating the cap are:

  • Bereavement Allowance/Widowed Parent’s/Mother’s Allowance 
  • Carer’s Allowance 
  • Child Benefit 
  • Child Tax Credit 
  • Employment and Support Allowance (ESA) (contribution-based and income-related) except where the Support Component has been awarded 
  • Guardian’s Allowance 
  • Housing Benefit 
  • Incapacity Benefit 
  • Income Support 
  • Jobseeker’s Allowance (contribution-based and income-based) 
  • Maternity Allowance 
  • Severe Disablement Allowance (SDA) 
  • Widow’s Pension 

NB: Any benefits or other income that are not included in the above list will not be taken into account when calculating the level of the cap. 

The benefits and payments that will be disregarded when calculating the benefit cap are: 

  • Bereavement payment 
  • Council Tax Benefit or the replacement localised support for Council Tax 
  • Discretionary Housing Payments 
  • Social Fund Payments – all one-off payments: 
    • Budgeting Loans 
    • Cold Weather Payments 
    • Community Care Grants 
    • Crisis Loans 
    • Funeral Payments 
    • Sure Start Maternity Grants 
  • Pension Credit 
  • Residency order payments 
  • Statutory Adoption Pay – Paid by employers
  • Statutory Maternity Pay – Paid by employers
  • Statutory Paternity Pay – Paid by employers
  • Statutory Sick Pay - Paid by employers
  • Winter Fuel Payment

If an individual, their partner or any children they are responsible for and who live with them in a household are entitled to Working Tax Credit (WTC) (NB. they do not have to be actually in receipt of WTC), or are in receipt of any of the following, they will be exempt from benefit cap: 

  • Attendance Allowance 
  • the support component of ESA 
  • War Widow/Widower’s Pension 
  • Disability Living Allowance (DLA) or its replacement Personal Independence Allowance (PIP) 
  • Industrial Injuries Benefits 
  • Armed Forces Compensation Scheme payments 
  • War Pension Scheme payments (includes War Widow’s/Widower's Pension and War Disablement Pension) 

Telling people now gives them longer to use the support available to help them find work or resolve housing issues.

They can see a personal adviser at their local Jobcentre who will be able discuss the help and support that might be available to them.

If they have any queries regarding their housing or housing benefit, or they think that they might not be able to pay their rent, they should be advised to contact their local authority.

You and/or the claimant can also find more information at GOV.UK, which also has details of an online calculator that provides an estimate of the amount their Housing Benefit may be reduced from April 2013.

If they work sufficient hours to qualify for Working Tax Credit, but their earnings are such that they have nil entitlement, they will still be exempt from the benefit cap.

But if they don’t work sufficient hours to qualify for Working Tax Credit, the benefit cap will still apply.

The cap is calculated per household. They may receive a letter if the person’s partner or any children they are responsible for and who live with them receive out of work benefits.

They may receive a letter if they or their partner receive Housing Benefit. If so the benefit, including Housing Benefit only that they or their partner receives may take them into the benefit cap level.

Any affected benefits claimed by the individual, their partner or any children they are responsible for and who live with them are included in the calculation. So we want both partners to be aware of the cap and are sending a letter to each of them. Some benefits may be paid to the individual and some to their partner.

The individual and their partner are both responsible for payment of the rent on their house and, therefore, both affected by the benefit cap on their housing benefit.

There will be a grace period whereby the benefit cap will not be applied for 39 weeks to those who have been continuously in work for the previous 12 months.

We do not have any more information about the grace period at the moment. More information will be available later.

Universal Credit will be an integrated benefit in place of Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit.

The amount of Universal Credit will depend on the level of income and other family circumstances. It will be payable in and out of work so the complicated rules that apply currently when people start and leave a job, including hours rules, will disappear, improving the incentive to work.

Find out more about Universal Credit here.

The level of the cap will be:

  • £500 per week for couples (with or without children) and lone parents
  • £350 per week for single adults

By adding together all the included benefits that the individual, their partner and any children they are responsible for and who live with them are entitled to. It does not include non-dependants.

Currently we cannot give an individual calculation because benefit cap will not be applied until April 2013. Between now and April 2013 their individual circumstances may change, which could affect the amount of benefit that they are entitled to.

Claimants can work out how the cap might affect them by adding all the out of work benefits listed on their direct mail letter under ‘Which benefits count towards the cap? ‘They can get this information from their award letters.

When they have listed all the out of work benefits they receive and the amounts, they or their advisors can go to the benefit cap calculator.

This calculates the amount of benefit they receive each week and provides an estimate of how much their Housing Benefit may be reduced.

NB: The more precise claimants can be with their answers, the more accurate their estimate will be.

 

DWP is aware that some accessibility issues have been encountered with the benefit cap online calculator and want to assure users that we are urgently seeking a solution. It is extremely important to us that all our claimants can access the full suite of support available.

In the meantime advisory staff may be able to help individuals complete the information requested in the calculator.

DWP staff cannot help them to complete it over the telephone.

At first, only their housing benefit will go down to make sure that the total amount of their benefits is not more than the benefit cap level. They may have to use other benefits to meet any shortfall in their rent.

In the long term the cap will be applied as part of the new Universal Credit system.

The benefit cap being introduced in April 2013 is not the same as the changes to Local Housing Allowance (LHA) introduced from April 2011. The 2011 LHA changes placed a cap on the level of LHA payable to cover rent, dependent on the number of rooms required. The cap is a limit on the total out of work benefit that a household unit can receive from April 2013.

Support to help find – or move closer to – employment is available for everyone who DWP believes may be affected by the benefit cap from April 2013.

DWP can arrange for someone to contact them, to book an appointment with a Personal Adviser to discuss what support they can receive to find employment.

The kind of support available will depend upon their personal circumstances.

Information they might need is available online at www.gov.uk/browse/working/finding-job, where they can get help looking for work, and information on how to update their skills, write a CV, apply for jobs and prepare for an interview.

Their provider will continue to support them to look for work and help them get the skills they may need to find a job.

If they have any queries regarding their housing or Housing Benefit, or they think that they might not be able to pay their rent, they should contact their local authority.

Jobcentre Plus may be able to offer access to a package of Work Preparation Support, including access to caseload interviews by personal advisers as part of the Jobcentre Plus offer. Lone parents may be able to restrict the hours of work they are looking for to normal school hours. They may also receive further help with childcare when moving into work.

DWP offers a range of services to support disabled people into employment and to stay in employment.

A personal adviser will be able to offer support that will help them find suitable employment around their caring responsibilities.

If they need to discuss their housing situation they will need to talk to their local authority.

Finding work and qualifying for Working Tax Credit would mean the benefit cap would not apply to them. Therefore, they may be able to stay in their current home and improve their standard of living.

Individuals cannot appeal against the decision to apply the benefit cap.

If DWP is going to cap their benefit, we will write to them to inform them of this.

If they think benefit cap has been calculated incorrectly they may contact us to review this.

Finding work and qualifying for Working Tax Credit would mean the benefit cap would not apply to them. Therefore, they may be able to stay in their current home and improve their standard of living.

The Money Advice Service may be able to help people with money, budgeting and debt advice. Please visit www.moneyadviceservice.org.uk/.

 


Last updated on 01 February 2016