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The Benefits cap explained

I hear it more and more often, I have been “benefit capped” and that is why I am in rent arrears. However when asking a client why they have been benefit capped they cannot give me an answer as they simply don’t know.


 

The Benefits Cap is now applied to all people claiming benefits who are of working age, this is regardless of whether you are single, part of couple, or have children.

The Cap will be applied to any Housing Benefit or Universal Credit received. Each household is allowed the following weekly allowance before the Cap is applied:

  • £350 for a single person with no children
  • £500 for a couple (with or without children) and lone parents with dependent children.

*It is important to note that the allowance does not vary depending on the amount of children that you have*

The Cap applies to the majority of benefits that are available (including Child Benefit, JSA, ESA, and Child Tax Credits). There are however some exemptions. Unless your benefit is listed below you are at risk of being Benefit Capped:

  • Working Tax Credits
  • Disability Living Allowance
  • Personal Independence Payments
  • You have reached the age for Pension Credit (however if you are part of a couple and your partner is not eligible for Pension Credit, the Cap could still be applied)
  • If you or your partner has been in employment for at least 50 of the 52 weeks prior to claiming the benefits

If you are in receipt of one of the above benefits then you will not be subjected to the Benefit Cap regardless of your income, even if it exceeds the amount stated above.

If your weekly income exceeds the amounts stated and you are not in receipt of one of the above benefits then the amount that you receive above the limit will be deducted from your Housing Benefit. So for example if you are allowed to receive £500 per week and your benefits total £550 per week, your Housing benefit will be reduced by £50 per week.

 

If you are affected by the Benefit Cap there is very little that you can do to reduce the amount of rent that you will be required to pay. There a number of options that you can consider to address the issue:

  • Apply for Discretionary Housing Payments from the Local Authority. This is however a short term solution as this will only be paid for a short period of time;
  • Either get into work, or increase your hours of work so that you can receive Working Tax Credits, as once you are in receipt of these you are exempt from the benefit cap;
  • If it is possible or available seek alternative accommodation such as a transfer of tenancy to a smaller or cheaper property. If you are in local authority or housing Association accommodation ask to be placed on the transfer list for alternative accommodation;
  • Seek assistance from the local authority for Homelessness advice. You would be considered homeless as it would not be reasonable for you to continue to occupy your property as it is no longer affordable to you.

Unfortunately if you are not able to change your circumstances or receive assistance with paying the shortfall in your Housing Benefit you may be at risk of losing your home. You must ensure that you are able to pay the current weekly rent for your property. If this is not affordable to you then you need to speak with your landlord and try to reach an agreement.

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