What is the Benefit Cap
From April 2013, there will be a limit on the amount of benefit you can get if you're of working age. This is called the Benefit Cap. 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.
Even though the cap doesn't come into effect until next year, it's important to know about it now. If the cap affects you, your Housing Benefit will go down in April 2013 and you may need to plan for this.
How will the cap work
From April 2013, 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.
Which benefits are included in the cap?
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 by the cap?
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 (from April 2013)
- 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 which won't be counted for the cap
There are some benefits which won't be counted when working out whether your benefit income is over the cap. These are:
- Council Tax Benefit or the replacement local support for Council Tax from April 2013
- 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.
What's happening now?
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 now and 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.
What can you do if you're affected by the cap?
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 before 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?
If your benefit is capped in April 2013, you could try the following:
- 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
- find out if you can get any help from a charity.
You can get information about how charities can help from the Turn2us website at www.turn2us.org.uk.
More information about the Benefit Cap is available on the Directgov website at www.direct.gov.uk.