The Benefit Cap

From April 2013, there has been a limit on the total amount of benefit that most people aged 16 to 64 can get. This is called the Benefit Cap. Initially, it affected people living in four London Boroughs: Bromley, Croydon, Enfield and Haringey. All other areas of the country introduced the cap between July 2013 and September 2013.

What is covered?

The Benefit Cap applies to a household’s combined income from the main out-of-work benefits, plus Housing Benefit, Child Benefit and Child Tax Credit:

• Bereavement Allowance;

• Carer’s Allowance;

• Child Benefit;

• Child Tax Credit;

• Employment and Support Allowance (except where people are getting the support component);

• Guardian’s Allowance;

• Housing Benefit;

• Incapacity Benefit;

• Income Support;

• Jobseeker’s Allowance;

• Severe Disablement Allowance;

• Widowed Parent’s Allowance (or Widowed Mother’s Allowance or Widows Pension people started getting before 9 April 2001).

How much is the Benefit Cap?

The level of the cap is:

• £500 a week for couples (with or without children living with them);

• £500 a week for single parents whose children live with them;

• £350 a week for single adults without children, or whose children don’t live with them.

Exemptions

The following households are exempt from the cap:

Those entitled to:

• Working Tax Credit.

Those in receipt of:

• Disability Living Allowance;

• Personal Independence Payment (which started to replace Disability Living Allowance from April 2013);

• Attendance Allowance;

• The support component of Employment and Support Allowance;

• Industrial Injuries Benefits (and equivalent war disablement pensions and payments under the Armed Forces Compensation Scheme);

• War Widows and War Widowers pension.

Claimants who have been in employment for 52 weeks or more when they claim benefit will be exempt from the cap for a grace period of up to 39 weeks.

Where the Benefit Cap would not apply

Claimants will not be capped where someone in the household (claimant, partner or any children they are responsible for and who live with them):

• obtains work and becomes entitled to Working Tax Credit;

• receives one of the benefits that exempt recipients from the cap.

The government also says that people could also:

• move to cheaper accommodation or negotiate a rent reduction to one which is more affordable.

In the 2013 Spending Round the government announced that it will also, for the first time, introduce a cap on the country’s welfare spending. The cap will apply to over £100 billion of welfare spending. The government says it will set the cap in 2014 to start from 2015 and will it run over a five-year period.