What is the Benefit Cap?

From April 2013 a limit will be put on the amount of benefit you can get if you are of working age. Working age is defined as those below the qualifying age for Pension Credit.

Some people will get less benefit than before, but this will only affect you if you are claiming Housing Benefit.

If your combined income from certain benefits is more than the cap, you may lose some or all of your Housing Benefit.

The level of the cap will be:

• £500 a week if you are part of a couple, with or without dependent children
• £500 a week if you are a single parent
• £350 a week if you are a single person household

Which benefits are included in the Benefit Cap?

The benefit cap will limit the total amount of income from the following benefits:

• Bereavement Allowance
• Carer’s Allowance
• Child Benefit
• Child Tax Credit
• Employment 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 Mothers Allowance
• Widows Pension
• Widows Pension Age-Related

If you are currently getting benefits affected by the Benefit Cap

Even though the cap does not come into affect until next year, it is important to consider how it may affect you now.

The DWP have provided a Benefit Cap Calculator for you to use to see if you will be affected by the cap. Check you current benefit entitlement and find out how much benefit you may lose using the benefit cap calculator

Consider whether your circumstances will change before April 2013. It could be that you have a child that will no longer be financially dependent on you, which could mean that you are less affected by the cap. Or it could be that you are expecting a child which would increase your level of benefits, pushing you over the limit of the cap.

If the DWP believe that you will be affected by the cap according to the current information that they hold about your household then they will write to you. Please note that the information that they hold may not be up to date and so you may need to contact them regarding this, also your circumstances may change between now and April 2013.

The DWP has set up a Benefit Cap helpline to answer questions, the number is 0845 605 7064 or textphone 0845 608 8551.

Who is not affected by the Benefit Cap?

The cap will not be applied if you qualify for Working Tax Credit. You must work a minimum of 16 hours a week

If you or members of your family are in receipt of any of the following benefits:

- Disability Living Allowance
- Attendance Allowance
- Personal Independence Payment (from April 2013)
- The support component of Employment and Support Allowance
- Industrial Injuries Benefits
- War Widow’s or War Widower’s Pension

What can you do if you are affected by the Benefit Cap?

You may need to consider the following options to help you with the cap:

If there is a minimal reduction in your benefits you could consider using some of the income from your other benefits to cover the shortfall in Housing Benefit. Review your household expenditure and see where you can reduce your weekly household spend to put towards your rental payment, which is your primary debt. It may be best to write down all your income and your financial outgoings, and see where you may be able to save some of your income for other purposes.

Consider getting into employment or increase your hours of work, so that you may be eligible for Working Tax Credit. This would mean that the cap would not affect you.

If you are currently receiving benefits and seeing a Jobcentre Plus adviser, a work programme provider or Work Choice provider, they will continue to help you become employment ready. If you do not currently in contact with one of these, make arrangements with your local Job Centre to see what assistance is available.

Consider negotiating with your landlord a rent reduction or move to cheaper accommodation. Use the Local Housing Allowance calculator to see if you can find an area that is cheaper to live in

What is the Size Criteria?

As part of the Welfare Reform, the Government is introducing size criteria for working age Housing Benefit claimants who live in social housing which will come into effect on 1st April 2013.

This means that Council and Housing Association tenants who live in social housing, who currently claim housing benefit to assist with paying rent, will see a reduction in your housing benefit entitlement, if there are spare bedrooms in the property.

What is working age?

Working age is defined as those below the qualifying age for Pension Credit, by April 2013 the qualifying age for state pension credit is 61 and this will mean that anyone born after 6 October 1951 will be affected by the changes.

If you are a couple where one member has reached pensionable age and the younger member is still of working age, you will not be affected by the size criteria. However, when Universal Credit is introduced in October 2013, it is likely that new claimants will both need to have reached pensionable age to be exempt.
click here to see if you qualify for pension credit

How many bedrooms are allowed?

You are classed as under-occupying if you have more bedrooms for your household than you need.

Housing Benefit allocates one bedroom to each of the following:

• Each adult couple
• Any other person aged 16 or over
• Two children of the same sex under the age of 16
• Two children regardless of sex under the age of 10
• A non-resident carer where they provide overnight care for the claimant or their partner.

For example:

A single person or couple living in a two bedroom home will only require one bedroom and therefore would be under-occupying by one bedroom.

Or

A couple with two children of different sex under the age of 10 in a three bedroom property will be under-occupying by one bedroom.

The size criteria will affect those where:

• If separated parents share childcare, the child will only be taken into account when calculating size criteria for the ‘main carer’, if care is shared equally then the main carer will be the parent that receives child benefit.

• Parents whose children visit but are not part of the household are not assessed as needing an extra bedroom.

• Foster children are not assessed as needing an extra bedroom.

• Couples using a spare bedroom when recovering from an illness will still be considered to be under-occupying.

• People with disabilities living in adapted or specially designed properties which have more bedrooms than permitted by the size criteria will not be exempt from the reduction in housing benefit.

Non-dependants:

All non-dependant adults are counted as part of the household for the assessment for size criteria.

For example:

A couple with five adult children (aged over 18) will be assessed as having a six bed need, but claimants may still have a reduction in housing benefit due to non-dependant deductions.

How much Housing Benefit will be lost?

Working age social housing tenants who are under-occupying their home will see their Housing Benefit reduced by:

• 14per cent if they are under-occupying by one bedroom

• 25per cent if they are under-occupying by two bedrooms or more

For example:

If your rent is £120 per week, you are receiving full housing benefit and you are under-occupying by one bedroom, then a 14per cent reduction in your entitlement will be £16.80 per week. This works out to be £72 per month.

If you do not get full housing benefit to cover your rent the reduction in benefit will still be a percentage of the full housing rent.

For example:

If the rent is £80 per week and housing benefit only pay £40 per week towards the rent the 14 or 25 per cent will be deducted from the £80.

What can you do if you are affected by the Size Criteria?

You may need to consider the following options to help you with the shortfall in rent:

If there is a minimal reduction you could consider using some of the income from your other benefits to cover the shortfall in Housing Benefit. Review your household expenditure and see where you can reduce your weekly household spend to put towards your rental payment, which is your primary debt. It may be best to write down all your income and your financial outgoings, and see where you may be able to save some of your income for other purposes.

Consider getting into employment or increase your hours of work to cover the shortfall. You can contact your local Job Centre Plus for information regarding work clubs and The Work Programme.

Consider downsizing to smaller accommodation that is suitable for your household. There are various options available for moving including the Housing Register and Mutual Exchange.

Take in a lodger, check with your landlord if you are able to do this.

Apply for a Discretionary Housing Payment (DHP). A DHP is a short-term payment that can help cover the shortfall in rent.

DHP payments are assessed on the household’s circumstances and are not guaranteed. The amount and length of a payment will depend on your circumstances and the amount of money the Local Authority has available, but will not exceed 52 weeks.

The Government has provided additional funding to the DHP to help assist people who have a disability and those that are registered as foster carers. This will still be assessed on a case by case basis, but may include a longer payment term to help assist with the shortfall in rent.

What is Universal Credit?

As part of the Welfare Reform Act the Government are introducing a single payment Universal Credit. This is a means-tested credit for people of working-age. It is designed to make the welfare system simpler by combining several benefits into one credit and fairer by ensuring that people are better off in employment rather than claiming benefits.

From October 2013 Universal Credit will replace:

• Income Support
• income-based Jobseeker’s Allowance
• income-related Employment Support Allowance
• Housing Benefit
• Child Tax Credit
• Working Tax Credit

Universal Credit is not specifically an ‘in work’ or ‘out of work’ benefit. It is one credit for people whatever their employment status. Because of this, it should ease the transition into and out of work as people won’t need to transfer to a different benefit as their situation changes.

How is a Universal Credit payment calculated and what does it include?

Universal Credit is made up of a standard allowance and potentially five elements, as any award is based on a claimant’s personal circumstances. The five elements are:

• Child Element / Disabled Child Additions
• Childcare Element
• Carer Element
• Limited Capability for Work Element
• Housing Element.

The monthly Universal Credit payment covers everyone in a family who qualifies for support. This may be:

• A person claiming for themselves alone
• A person claiming for themselves and their child or children
• A couple making a joint claim for themselves
• A couple making a joint claim for themselves and their child or children.

Children over 18 living with their parents or siblings can claim Universal Credit in their own right.

What is not included in Universal Credit?

• Council Tax Benefit
• Carer’s Allowance
• Contributory Jobseeker’s Allowance
• Contributory Employment and Support Allowance
• Disability Living Allowance (Personal Independence Payment)
• Child Benefit
• Social Fund
• Statutory Sick Pay
• Statutory Maternity Pay
• Maternity Allowance
• Industrial Injuries Disablement Allowance
• Bereavement Benefits

What’s different about Universal Credit?

The main differences between Universal Credit and the current welfare system are:

• Universal Credit will be available to people who are in work and on a low income, as well as to those who are out of work most people will apply online and manage their claim through an online account

• Universal Credit will be responsive, as people on low incomes move in and out of work, they’ll get ongoing support – giving people more incentive to work for any period of time that is available

• Most claimants on low incomes will still be paid Universal Credit when they first start a new job or increase their part-time hours

• Claimants will receive just one monthly payment, paid into a bank account in the same way as a monthly salary

• Support with housing costs will go direct to the claimant as part of their monthly payment.

What's happening to other benefits?

The following benefits are changing:

• Disability Living Allowance will be replaced by Personal Independence Payment from 2013

• Council Tax Benefit will be abolished in April 2013 and replaced by Council Tax Support

• Pension Credit will be amended from October 2014 to include help with eligible rent and dependent children

When does Universal Credit start?

October 2013 – national launch of Universal Credit

New claimants: Will be able to make claims for Universal Credit from October 2013, while claims for existing benefits and credits will be gradually phased out. From April 2014, all new claims will be for Universal Credit.

Existing claimants: Will move onto Universal Credit in line with a phased approach that we expect to have completed by the end of 2017

This phased process will be completed in 2017 and we will continue to provide information on this, as it becomes available.

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