THINKING ABOUT CLAIMING UNIVERSAL CREDIT? If you are already in receipt of IR-ESA, Income Support, Income-Based JSA, Housing Benefit and / or Tax Credits and have a large family or pay a high rent, then it is worth checking whether Universal Credit is your only / best option. Speak to a Benefits Adviser.
The Benefit Cap
The Benefit Cap limits the overall amount of welfare benefits a ‘working age’ household can receive.
The limit means that those people most likely to be affected are those with a large family (three of more children) and/or a high rent (i.e. those who receive a high amount of welfare) who are not otherwise excluded due to their circumstances.
If you are affected by the Benefit Cap, then the amount you get from Universal Credit will go down to make sure you do not get more than the welfare benefit cap limit.
Who isn’t affected by the Benefit Cap?
The Benefit Cap does not apply to you (ie you are excluded) if:
- In any Assessment Period you and/or your partner have earned income of £658 or more.
- You, your partner, or a child or young person included in your claim gets Disability Living Allowance / Child Disability Payment, Personal Independence Payment / Adult Disability Payment, Armed Forces Independent Payment, Attendance Allowance or Constant Attendance Allowance.
- You or your partner have been found to have a Limited Capability for Work and Work Related Activity (ie your award includes a LCWRA Element).
See If you have a health condition that affects your ability to work for more information.
- 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 your partner are getting (or have a recognised underlying entitlement to) Carer’s Allowance, or have a Carer Element included when your Universal Credit award is assessed.
See If you are a carer for more information.
- You or your partner get paid Guardian’s Allowance.
- You (or you and your partner) have lost your job and you received earnings of at least £658 (or £617 before April 2022) per month in each of the previous 12 months – you will be protected for a ‘grace period’ of 9 months.
How do you work out if the Cap applies?
If you are not getting one of the benefits / in one of the situations that would exclude you from the Benefit Cap, then the Benefit Cap might reduce your Universal Credit.
First the DWP will add together most of the benefits you are entitled to (including Child Benefit) and add them to the Universal Credit award to work out your monthly total welfare figure.
They will then compare this total to the Benefit Cap limit that applies to you:
|Situation||Weekly Amount||Monthly Amount|
|Families with children and couples – in London||£442.31||£1916.67|
|Families with children and couples – outside London||£384.62||£1666.67|
|Single people – in London||£296.35||£1284.17|
|Single people – outside London||£257.69||£1116.67|
If your total welfare is above this Cap limit in any Assessment Period, then your Universal Credit payment will be reduced for that Assessment Period.
If you are struggling to pay your rent because of the Cap, then you might be able to get a Discretionary Housing Payment to help you.
See Discretionary Housing Payments for more information.
For the government’s Benefit Cap calculator go to this link: https://www.gov.uk/benefit-cap-calculator.
Mahia and Para have 6 children aged 15, 14, 10, 7, and twins aged 6. They have had difficulty finding work, and their rent is £128.00 per week (which works out at £554.67 per month). They live outside Greater London in a 4 bedroom housing association house.
They are entitled to:
Child Benefit = £407.55 per month
Universal Credit = £2593.29 per month
Their total “welfare” is £3000.84 per month.
As their total welfare income is £1334.17 over their benefit cap of £1666.67 per month, their Universal Credit will be reduced by £1334.17 to £1259.12
Shaun lives outside Greater London. He is a single parent with three children age 11, 9 and 7. He is looking for work. His rent is £110 a week for a three bedroom council house:
Child Benefit = £219.70 per month
Universal Credit = £1590.74 per month
His total “welfare” is £1810.44 per month.
The Benefit Cap limit which applies to Shaun is £1666.67 per month.
His excess income is £143.77 (£1810.44 minus £1666.67 = £143.77)
His UC will be reduced by £143.77 – his next payment will be £1446.97
NOTE: When the DWP add your benefits together they will not include: any Childcare Costs Element in your Universal Credit award, Council Tax Support, Statutory Sick Pay, Statutory Maternity Pay, Bereavement Support Payment, Discretionary Housing Payments or Housing Benefit paid on ‘specified accommodation’ (ask your landlord or a Benefits Adviser if you’re not sure if this applies to you).