The Benefit Cap

CORONAVIRUS: The Benefit Cap rules have not been changed. Many people have been told to claim Universal Credit because their income has dropped due to the Coronavirus – but this may not be their only option or, if they are affected by the Benefit Cap their best option – especially if they are already getting Tax Credits and/or Housing Benefit. See our Coronavirus pages for more information.

The Benefit Cap

The Benefit Cap limits the overall amount of welfare benefits a ‘working age’ household can receive.

The Benefit Cap applies if you:

  • Are working age
  • Don’t qualify for an exemption
  • Have a total income from benefits which would be above the cap limit.

You will only be affected by the Benefit Cap if your total ‘welfare’ is above the cap limit – this usually only applies to families with 3 or more children, and those with high rents (assuming they are not otherwise excluded from the Benefit Cap – see below).

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 cap limit.

If you think you may be affected by the Benefit Cap, first check that you don’t fit into one of the excluded groups.

Who isn’t affected by the Benefit Cap?

The Benefit Cap does not apply to you ie you are excluded if:

  • In any Assessment Periods in which you or your partner have earned income of £604 or more.

  • If you, your partner, or a child or young person for whom you get Child Benefit, gets Disability Living Allowance, Personal Independence Payment or Armed Forces Independent Payment.

  • If 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 disability that affects your ability to work for more information.

  • If you or your partner get Industrial Injuries Disablement Benefit.

  • If you or your partner get a War Disablement Pension, Armed Forces Compensation Scheme payment, or a War Widows’/Widowers’ Pension.

  • If 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.

  • If you or your partner get paid Guardian’s Allowance.

  • If you (or you and your partner) have lost your job and you received earnings of at least £569 per month in each of the previous 12 months (£604 for any month after March 2020) – then 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:

SituationWeekly AmountMonthly 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.

 

Example:
Mahia and Para have 6 children aged 17, 14, 10, 7, and twins aged 5. 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.

They are entitled to:

Child Benefit = £393.47 per month
Universal Credit = £2609.11 per month

Their total “welfare” is £3002.58 per month.

As their total welfare income is £1335.91 over their Benefit Cap of £1666.67 per month, their Universal Credit will be reduced by £1335.91 to £1273.20.

They will need to pay for their rent, food, bills etc. out of their reduced Universal Credit and their Child Benefit.

Example:
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 house:

Child Benefit = £212.12 per month
Universal Credit = £1639.47 per month

His total “welfare” is £1851.59 per month.

The Benefit Cap limit which applies to Shaun is £1666.67 per month.
His ‘excess’ income is £184.92 (£1851.59 minus £1666.67 = £184.92).

His Universal Credit will be reduced by £184.92 – his next payment will be £1,454.55.

NOTE: When they add your benefits together they will not include: any Child Care Cost Element of the Universal Credit award, Council Tax Support, Statutory Sick Pay, Statutory Maternity Pay, Bereavement Support Payment, Discretionary Housing Payments and Housing Benefit paid on ‘specified accommodation’ (ie certain supported housing – ask your landlord or a Benefits Adviser if you’re not sure if this applies to you).

 

Frequently Asked Questions