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, it might be worth registering an appeal against the application of the Benefit Cap to your Housing Benefit or Universal Credit claim. There is an ongoing court case about the lawfulness of the Benefit Cap. In June 2017, the High Court ruled that Benefit Cap with regards to lone parents with children under 2 is unlawful. The DWP appealed this ruling and in March 2018 the Court of Appeal decided that the Benefit Cap could be imposed on lone parents with children under two. The families are challenging this decision. Depending on the ruling, it may help you if you have already registered an appeal. The rules stay as they are until the outcome is known.  Please contact the Financial Inclusion Team on 0300 111 000 (Parkway Green) or 0800 633 5500 (Willow Park).

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:

Inside Greater London

  • £442.31 per week for single parents.
  • £442.31 per week for couples with or without children.
  • £296.35 per week for single people without children.

Outside Greater London

  • £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 for Wythenshawe

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 Woodhouse Park.

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 Northenden. 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 0800 169 0145 or view the Government’s Benefit Cap calculator here.