Benefit Cap

The Benefit Cap restricts the total amount of benefits an out-of-work household can receive.

How much is the cap?

The cap is currently set at £26,000 per year for couples and lone parents, and £18,200 per year for single people without children.

The Government has introduced measures through the Welfare Reform and Work Bill to reduce the cap to £23,000 per year in London (£15,410 for single people) and £20,000 per year (£13,400 for single people) in the rest of the country. The new Benefit Cap will be introduced from 7 November through to the end of January 2017. The Department for Work and Pensions (DWP) has given us a list of local authorities showing when they will be going live with the cap. Download the schedule for further details.

The schedule details the week in which local authorities can expect to receive their benefit cap transactions for current benefit claims that are not currently capped but where the revised cap levels will now apply.

Please note, however, that are many factors that could impact on the DWP processing cases, so associations should plan for implementation a week on either side of the date within the schedule. If your planning date changes you will hear from your DWP contact.

Which benefits are included?

The cap applies to the total amount people within a household will get from the following benefits:

  • Bereavement Allowance
  • Carer’s Allowance (this won’t be affected by the Benefit Cap from 7 November 2016)
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance (unless you get the ‘support’ component)
  • Guardian’s Allowance (this won’t be affected by the Benefit Cap from 7 November 2016)
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Jobseeker’s Allowance
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widowed Parent’s Allowance (or Widowed Mother’s Allowance or Widows Pension if they started getting it before 9 April 2001)
  • Universal Credit (unless they’ve had a work capability assessment and aren’t fit for work).

Payments towards carer’s costs in Universal Credit won’t be affected by the Benefit Cap from 7 November 2016.

Benefits that aren’t included

The cap does not apply if anyone in the household qualifies for Working Tax Credit or gets any of the following benefits:

  • Armed Forces Compensation Scheme
  • Armed Forces Independence Payment
  • Attendance Allowance
  • Disability Living Allowance (DLA)
  • Employment and Support Allowance (if they get the support component)
  • Industrial Injuries Benefits (and equivalent payments as part of a War Disablement Pension or the Armed Forces Compensation Scheme)
  • Personal Independence Payment (PIP)
  • Universal Credit payment for ‘limited capability for work and work-related activity’
  • War pensions
  • War Widow’s or War Widower’s Pension.

If you have adult children or non-dependants living with you and they qualify for any of these benefits, you may be affected by the cap. This is because they’re not usually included in your household.

Grace period

The cap will not apply for a 39 week grace period where a claimant loses their job after a period of continuous employment.

Supported housing

Housing benefit or Universal Credit paid for ‘supported exempt accommodation’ and ‘specified accommodation’ is not included in the cap calculation.

When will the benefit cap be lowered?

The reduction in the benefit cap is expected to be phased in in 2016-17. Exact timings will be published in regulations.

Who is affected?

Approximately 23,000 households are affected by the current (£26K) cap.

The Government impact assessment estimates that in 2017/18 around 126,000 households will be affected by the cap, losing an average of £63 per week.

Find out more

There is further information, including a benefit cap calculator available on GOV.UK