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New benefits cap limit comes into force today

Published 7 November 2016 by

From today, the amount of benefits you receive could lower significantly. The Government is cutting the benefit cap limit set at £26,000 to £23,000 in London and £20,000 elsewhere.

This is now the total amount of benefits a household can receive. Experts predict that some families will start to lose up to £115 a week as a result of the cuts, and it is set to affect the lives of around 300,000 children.  

To make sure you know how this new benefit cap limit could affect you, we're taking you through what the benefits cap is and what's changing.

What's covered by the benefit cap?

The Government announced the benefit cap – a limit on the total benefits a household can receive –in 2010. Back then, a family couldn’t claim more than £26,000 benefits a year. Last year, former Chancellor George Osborne announced that a lower cap would come into force.

The cap covers most benefits including Child Benefit, Child Tax Credit, Jobseekers' Allowance, Income Support, Universal Credit and Maternity Allowance. It also includes Housing Benefit, despite the fact that the money goes straight to the landlord.  

What exactly are the changes?

The new rate will be £20,000 a year (£384.62 a week) for residents outside Greater London. For couples or families inside Greater London, the new rate is £23,000 a year (£442.31 a week).

Single people without children living in Greater London will receive a cap of £15,410 a year (£296.35 a week), whereas for single people living elsewhere the cap is £13,400 a year (£257.69 a week).

This change is happening from Monday 7 November.

Why is it changing?

Ministers want to reduce the benefits cap so it’s less than the average salary to encourage people to look for work or increase their hours rather than relying on the Government for help.

But there is some concern that the benefits cap could affect some of the most vulnerable families in the UK. Research for the Chartered Institute of Housing (CIH) found that the new cap rate would affect the households of up to 300,000 children. 

The fact that the cap involves Housing Benefit is a particular concern – even though the money goes straight to the landlord. This is because people will have to pay more for their rent out of their own income that they did before.

Who does the benefits cap affect?

If you currently get any one of the benefits included in the cap, you might see this fall. Most people claiming benefits are aged 16 to 64 do not work or work less than 16 hours a week.

The benefits cap relates to one household, so it will group together the benefits of you, your partner and any children living under the same roof. Any grown-up children, relatives or friends that live in the household will receive their own benefits cap.

You will be exempt from the cap if you or your partner work 16 hours a week or more. If your partner is 65 or over, they are exempt but their partner is not if they are still of working age.

Are there any exclusions?

You won't be affected by the benefits cap if you receive one of the following:

• Armed Forces Compensation Scheme,

• Armed Forces Independence Payment,

• Attendance Allowance,

• Disability Living Allowance,

• Employment and Support Allowance (the support component),

• Industrial Injuries Benefits (and equivalent payments),

• Personal Independence Payment,

• Universal Credit payment for 'limited capability for work and work-related activity',

• War pensions,

• War Widow's or War Widower's Pension, or

• Working Tax Credit.

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