HUNDREDS of thousands of households on Universal Credit and other benefits are set to get extra cash due to a cap increase.
Small print in Jeremy Hunt's Autumn Budget revealed that more hard-up households will see their payments go up in April as a result of the changes.
Also announced in today's Budget was:
- Up to £1,350 in cost of living payments
- Pension triple lock to stay in £870 boost for seniors
- Benefits including Universal Credit and pension credit to rise with inflation
- New work coach requirements for Universal Credit
- Social housing rents to rise 7%
- Freeze on income tax and National Insurance thresholds
- Stamp duty cut to end in 2025
- Typical energy bills to be capped at £3,000
- Minimum wage to rise to £10.42 an hour
The benefit cap limits the total amount in help that households can claim.
It varies depending on what the support is, your personal circumstances and where you live.
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It applies to most people aged 16 or over who have not reached State Pension age.
If your benefit payments are more than the cap then your Universal Credit or Housing Benefit is reduced.
Universal Credit counts towards the cap, along with other benefits like child benefit, housing benefit and jobseekers allowance – but not all benefits are affected by the cap.
Currently, the cap is £20,000 for families – or £13,400 for single adults – nationally.
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While in Greater London, the cap stands at £23,000 for families and £15,410 for single adults.
But small print in the Budget documents revealed these caps will be raised in line with September's inflation figures, which are 10.1%.
That means nationally, the cap will go up to £22,020 for families, and £14,753 for single adults.
In Greater London, the cap will go up to £25,323 for families and £16,967 for single adults.
The cap affects hundreds of thousands of households.
Latest data from the government shows around 130,000 people had their benefits capped at May 2022.
Of these households, 114,000 people were capped on Universal Credit and 13,000 were capped on Housing Benefit.
It is the first time since 2016 that the cap has gone up.
While households will welcome extra cash in their pocket, experts have warned the cap increase won't be enough to help struggling households while a cost of living crisis cripples budgets.
Child Poverty Action Group chief executive Alison Garnham said while the change is a "relief", it will "will not stop the ice from cracking under struggling families".
She said: "This is only the fourth time benefits have risen by inflation in the last ten years and as a result of austerity – that today the chancellor praised – there are almost 4 million kids living in poverty in the UK."
While Save the Children director of UK impact Dan Paskins said he hopes this change will lead to the government "scrapping this cap entirely".
He added: "This arbitrary and unfair cap prevents over 100,000 households with children from accessing their full entitlement."
How much is the benefit cap currently?
The benefit cap outside Greater London is:
- £384.62 per week (£20,000 a year) if you’re in a couple
- £384.62 per week (£20,000 a year) if you’re a single parent and your children live with you
- £257.69 per week (£13,400 a year) if you’re a single adult
The benefit cap inside Greater London is:
- £442.31 per week (£23,000 a year) if you’re in a couple
- £442.31 per week (£23,000 a year) if you’re a single parent and your children live with you
- £296.35 per week (£15,410 a year) if you’re a single adult
What benefits count towards the cap?
- Universal Credit
- Bereavement Allowance
- Child Benefit
- Child Tax Credit
- Employment and Support Allowance
- Housing Benefit
- Incapacity Benefit
- Income Support
- Jobseeker’s Allowance
- Maternity Allowance
- Severe Disablement Allowance
- Widowed Parent’s Allowance (or Widowed Mother’s Allowance or Widow’s Pension if you started getting it before 9 April 2001)
If you're over state pension age you won't be affected by the benefit cap.
You also won't have your payments limited if you get working tax credit, have limited capability to work because of a health condition or disability on Universal Credit, or look after someone else with a disability and get UC.
If you or your partner earn £617 or more a month combined, after tax and National Insurance contributions, you won't be affected by the cap.
You may also get a nine-month "grace period" where the cap doesn't apply when you first start claiming Universal Credit.
What can I do if I'm hit by the benefit cap?
You should check if you're getting all the benefits you're entitled to, charity Turn2Us suggests.
There are some benefits that are not subject to the cap, like Personal Independence Payment (PIP) and attendance allowance, so if you get these they can boost your income.
You can use a free benefits checker to see what you might be entitled to, but be aware it won't be for certain until you apply.
Entitledto's free calculator works out whether you qualify for various benefits, tax credits and Universal Credit.
If you don't want to register, consumer group MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto's data that let you save your results without logging in.
Use Policy in Practice's calculator to not only find out which benefits you could receive but also to find out how much cash you'll have leftover each month after paying for housing costs.
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Charity Turn2Us' benefits calculator works out what means-tested benefits you might be entitled to, as well as whether you qualify for carers allowance.
It points out that it doesn't calculate non-means tested benefits and contributory benefits, but it will include these in your results if you’re already getting them.
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