Welfare Reform - Benefit Cap
The government has introduced a limit to the total amount of benefits that couples, lone parents and single people receive, based on an average income of a working household. This means that the maximum weekly benefit will be capped at £350 for a childless single household, and £500 for a couple or a lone parent.
People who the cap will not affect include:
- Single people or couples who are of pension age
- Households where one or more members receive Working Tax Credit
- Households where at least one member receives Disability Living Allowance, Constant Attendance Allowance, Personal Independence Payment, Industrial Injuries Benefits or Employment and Support Allowance, if paid with the support component
- Households where one member receives War Widow's or War Widower's Pension
What benefits count towards the cap?
The cap will apply to the total income a household receives from:
- Housing Benefit
- Income Support
- Job Seekers Allowance
- Child Tax Credit
- Child Benefit
- Bereavement Allowance
- Carers Allowance
- Employment and Support Allowance (except where paid with support) component
- Guardians Allowance
- Incapacity Benefit
- Maternity Allowance
- Severe Disablement Allowance
- Widowed Parents / Mother’s Allowance
- Widow’s Pension
How will the cap be applied?
If you get more benefits then the maximum entitlement, then the cap will be applied through deductions from Housing Benefit payments. This means that you will need to make up the shortfall in the rent yourself.
How much will I lose?
Find out how the benefit cap will affect you personally by using the benefit cap calculator. Visit www.direct.gov.uk/benefitcap
Where can I get more information?
You can contact the Government's Benefit Cap helpline number on 0845 605 7064.
Benefit Cap Examples
Miss Jacob lives on her own and receives £110 Housing Benefit and £71 Job Seekers Allowance every week.The Benefit Cap will not apply as the total amount of benefits are £181 per week.
Mr and Mrs Fredrick live with their five children in a three bed house. They receive £140 Housing Benefit, £12.80 Council Tax Benefit, £73.90 Child Benefit and £330 Child Tax Credit.The total amount of benefits for the family are £556.70. As Council Tax will not be included in the calculation, this family will lose £43.90 a week in benefits. This will be deducted from their Housing Benefit, and this will now be paid at £96.10 every week.
Mr and Mrs Khan live with their three children in a three bed house. The youngest child receives Disability Living Allowance.The Benefit Cap will not apply as one of the members of the household receives Disability Living Allowance.
Welfare Reform - Checklist
You can use the checklist below to prepare for some of the Welfare Reform changes.
- Check whether I have to pay because I am under-occupying my property by using the online tool
- Check whether I will be affected by the Benefit Cap
- Set up a Basic Bank Account in preparation for Universal Credit
- Download or use an online budget planner to help me budget
- Set up Direct Debit to pay my rent now or in the future
Further advice and guidance
If you are a Birmingham City Council tenant, you can get advice on how you are affected by contacting the Rent Service on 0121 675 2006. They can discuss the options available to you, or refer you to a free independent debt advice service.
If you are not a Birmingham City Council tenant, you should contact your landlord directly.
If you're worried that the benefit changes will reduce the money you have coming in, it's a good idea to start thinking ahead. Use the links below to help you plan and get further online advice.
Loan Sharks - Find out how to get help if you have been affected by illegal money lenders (also known as loan sharks).
Benefit Calculator - Get an estimate of what benefits you could get (including Housing Benefit).
Make a Housing Benefit claim online - If you are having problems paying your rent or Council Tax, then you might be able to get help towards paying these bills.
Report a change in circumstances to Benefits - If your circumstances have changed report this online to Benefit Services.
The Money Advice Service - Carry out a free online money health check or use some of the other helpful online tools, such as the money stretcher calculator.
Citizens Advice Bureau - Get free online advice on your rights including benefits, housing, employment, debt and legal matters.
Birmingham City Council Debt Advice Service - The Debt Advice Team takes a realistic and practical approach to helping people who are experiencing severe debt problems.
Department of Work and Pensions - Get information on benefits, pensions and jobs.
Citysave Credit Union - This is a community based financial organisation. It offers accounts such as savings, bill payment and budgeting and loans.