Updated 8 March 2013
Benefit cap
The benefit cap is part of the Welfare Reform Bill that received Royal Assent on 8 March 2012.
From April 2013 a cap will be introduced on the total amount of benefit that working age people can receive. This will mean that workless households should no longer receive more in benefits than the average earnings of working households.
In the first instance, the cap will be administered jointly by DWP and local authorities through deductions from Housing Benefit payments. In the longer term it will form part of the new Universal Credit system.
More detailed information about the cap can be found in the factsheet and the latest impact assessment below:
- Benefit cap factsheet (178KB)
– updated 1 February 2013 - Benefit cap frequently asked questions (63KB) – updated 26 March 2013
- Impact assessment for the Household Benefit Cap (101KB)
Implementation
The benefit cap will be implemented from April 2013, starting in four local authorities in London – Bromley, Croydon, Enfield and Haringey. These were chosen as London has the highest percentage of potential benefit cap claimants and a diverse cross section of residents. This will be a phased roll-out with the remaining local authorities implementing the cap from the 15 July 2013, with all appropriate households capped by the end September 2013.
A phased roll-out allows us to:
- test our systems and processes end to end in a controlled live environment
- ensure the supporting products and services for both staff and claimants are effective
- ensure there is a measured approach to rolling out the cap to affected households
- build capacity to learn and respond to issues raised in the initial phase of rollout to inform national rollout.
How you can help to support those affected
It’s important that claimants potentially affected by the cap are aware of the impact it could have on them.
Finding work and qualifying for Working Tax Credit may be the best way to ensure that the cap doesn’t apply and we will be offering employment support to all those potentially affected.
You can help them to understand what the cap might mean for them and encourage them to take up the offer of support and to respond proactively by finding work.
Households that aren't affected by the cap
The cap won’t apply to households where a partner or any dependant child qualify for Working Tax Credit or receive any of the following:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Industrial Injuries Benefits
- Employment Support Allowance, if paid with the support component
- Armed Forces Compensation Scheme payments
- War Pension Scheme payments (including War Widow’s/Widower’s Pension and War disablement Pension).
Those affected may avoid or reduce deductions to their Housing Benefit if they:
- negotiate the rent to a more affordable amount
- move to cheaper accommodation, if possible
- become entitled to an exempting benefit if the qualifying conditions are met.
There is also additional funding available through the discretionary Housing Payment scheme to support vulnerable households. This will be distributed to local authorities in the normal way.
How we are informing those affected
From the beginning of May 2012 we have been writing to all claimants potentially affected by the cap to give them as much notice as possible. An online calculator is available which can be used to get an estimate of how their Housing Benefit might be impacted at:
- Benefit cap calculator (Directgov)
Claimants will need to be aware which benefits they receive and how much their award is for, in order to understand how the cap might affect them. They can get this information from their award letters or by contacting the departments that pay their benefits.
