Benefit cap

The 'benefit cap' is the maximum amount of benefits that working-age claimants and their 'benefit unit'  can receive.[1] A benefit unit is the claimant, her/his spouse/civil partner/cohabiting partner, and any dependent children living in the same property.

A claimant's housing benefit or universal credit is reduced to ensure that the total amount of benefits received is not more than the benefit cap level.

If a claimant is not in receipt of housing benefit or universal credit the cap cannot be applied, even if her/his income from benefits exceeds the level of the cap.

The Supreme Court has held that the Benefit Cap (Housing Benefit) Regulations 2012 are not incompatible with Article 14 ECHR. The fact that they affect a greater number of women than men has an objective and reasonable justification.[2]

With effect from 7 November 2016, the benefit cap levels were reduced[3] and vary according to whether the claimant lives in Greater London or elsewhere. The cap was phased in over a period of 12 weeks from 7 November 2016 (see 'When the cap is applied' below). For universal credit claimants, the levels below applied from the first day of a monthly assessment period that fell on or after 7 November 2016. 

Advisers may want to check whether the claimant has income which is exempt from the cap or whether they claimant themselves are exempt.  There are sections below which detail these exemptions.

Housing benefit

For housing benefit claimants (not resident in Greater London)[4] the benefit cap is:[5]

• £384.62 per week for couples with or without children living with them

• £384.62 per week for lone parents with children living with them

• £257.69 per week for single adults without children living with them.

For housing benefit claimants who are resident in Greater London the benefit cap is:

• £442.31 per week for couples with or without children living with them

• £442.31 per week for lone parents with children living with them

• £296.35 per week for single adults without children living with them.

Universal credit

For universal credit claimants (not resident in Greater London), the benefit cap is:[6]

• £1666.67 per month for couples with or without children living with them

• £1666.67 per month for lone parents with children living with them

• £1116.67 per month for single adults without children living with them.

For universal credit claimants who are resident in Greater London, the benefit cap is:

• £1916.67 per month for couples with or without children living with them (either member of the couple must be resident in Greater London)

• £1916.67 per month for lone parents with children living with them

• £1284.17 per month for single adults without children living with them.

Until 7 November 2016, the benefit cap levels applied across the UK.

For housing benefit claimants, the benefit cap was set at:

• £500 per week for couples with or without children living with them

• £500 per week for lone parents with children living with them

• £350 per week for single adults without children living with them.

For universal credit claimants, the benefit cap was set at:

• £2167 per month for couples with or without children living with them

• £2167 per month for lone parents with children living with them

• £1517 per month for single adults without children living with them.

The claimant's housing benefit is reduced to ensure that the total amount of benefits s/he receives is not more than the benefit cap level.[7]

If a claimant is in receipt of universal credit, the cap is applied to ensure the universal credit paid does not exceed the cap.[8] However, any reduction applied to a claimant's universal credit to bring it to the benefit cap level is to be minus the amount of any childcare costs element for an assessment period.[9] If the childcare costs element is more than the excess benefit, then no reduction is applied.

When the cap is applied

Local authorities may determine whether the benefit cap applies if they have information suggesting that it may do, but are not required to apply the cap (ie reduce the claimant's housing benefit) until notified by the Department for Work and Pensions (DWP) that it applies to a claimant.[10]

In respect of the reduced cap level that applied from 7 November 2016, the DWP checked all current benefits awards and exemptions over a 12-week period from 7 November to the end of January 2017.[11] The DWP notified local authorities if the cap needed to be applied.

Dual cases in different local authorities

Where a claimant has two housing benefit claims, each under a different local authority area, the DWP has issued guidance as to how the cap is to be applied.[12]

The cap applies to the combined total income received by the 'benefit unit' from the following benefits:

• bereavement allowance/widowed parent's/mother's allowance

• child benefit

• child tax credit

• employment and support allowance (both contribution-based and income-related) except where the 'support component' has been awarded

• housing benefit

• incapacity benefit

• income support

• jobseeker's allowance (contribution-based and income-based)

• maternity allowance

• severe disablement allowance

• universal credit

• widow's pension.

The following benefits and payments are to be disregarded when calculating the cap:

• discretionary housing payments

• localised council tax support

• social fund payments

• winter fuel payments

• housing benefit where the claimant is living in 'specified accommodation', which is defined as:[13]

  - 'exempt accommodation' provided by a non-metropolitan county council in England, PRPSH, charity or voluntary organisation where that organisation or someone acting on their behalf provides the claimant with care, support or supervision

  - supported accommodation that falls outside the definition of 'exempt accommodation' because the care, support or supervision is not provided by the landlord or on its behalf

  - a refuge where the claimant is fleeing domestic violence

  - a local authority hostel providing care and attention

• housing benefit for universal credit claimants living in 'specified accommodation', which is defined as:[14]

  - 'exempt accommodation' provided by a non-metropolitan county council in England, PRPSH, charity or voluntary organisation where that organisation or someone acting on their behalf provides the claimant with care, support or supervision

  - supported accommodation that falls outside the definition of 'exempt accommodation' because the care, support or supervision is not provided by the landlord or on its behalf

  - a refuge where the claimant is fleeing domestic violence

  - a local authority hostel providing care and attention

• (with effect from 7 November 2016), any housing benefit entitlement of a universal credit claimant.[15]

For information about exempt accommodation see 'Special rules: exempt claims and exempt accommodation' on the page Eligible rent and rent restrictions.

The cap does not apply to claimants:[16]

• who have lost a job through no fault of their own if they, or their partners, had worked at least 50 of the last 52 weeks before losing their jobs. Periods of work abroad and periods covered by zero hours contracts (provided there was no claim for working-age benefits during that time) count in calculating the time in work.[17] This exemption only applies for a limited period of 39 weeks - known as the 'grace period'

• claimants who qualify for working tax credit personally or through their spouses/partners. If they work sufficient hours to qualify but their earnings result in a nil entitlement, they will still be exempt from the benefit cap. For details about the hours needed to qualify, see Gov.uk

• whose 'benefit unit' is in receipt of any of the following benefits:[18]

  - disability living allowance or personal independence payment

  - attendance allowance

  - employment and support allowance (support component)

  - industrial injuries benefits (and equivalent pensions and payments under the Armed Forces Compensation Scheme)

  - war widows and war widowers pension

  - (with effect from 7 November 2016, and, for universal credit claimants, applying from the first monthly assessment period that occurs on or after that date) carer's allowance or the carer element of universal credit

  - (with effect from 7 November 2016, and, for universal credit claimants, applying from the first monthly assessment period that occurs on or after that date) guardian's allowance

• over the qualifying age for pension credit (see below)

Note - the exemption from the benefits cap due to being in receipt of an exempting benefit does not extend to the period of time while the decision on a claim is pending, nor while waiting after an adverse decision is appealed.

Claimants of pension credit age

Claimants over the qualifying age for pension credit are not subject to the benefit cap. The state pension calculator on Gov.uk can be used to calculate when a claimant will qualify for pension credit.

If a claimant is claiming as part of a couple and only one of the couple is over the qualifying age for pension credit, the benefit cap:

• does not apply if s/he is in receipt of housing benefit

• applies if they are in receipt of universal credit (and will continue to apply until both members of the couple are over the qualifying age for pension credit). [19]

The Supreme Court confirmed that it is not unlawfully discriminatory or in breach of the UN Convention on the Rights of the Child 1989 to apply the benefit cap to lone parents households with children below school age - while such households, particularly those with children under the age of two, are significantly affected by the cap, the government policy not to treat them differently to other households who are capped is not manifestly without reasonable foundation. [20]

Discretionary housing payments (DHP) are not included in the cap.  Affected claimants should continue to request a discretionary housing payment to make up any rent shortfall caused by the imposition of the cap.

Detailed information on the implementation and administration of the benefit cap can be found in HB Circular A15/2013 and in HB Bulletin G8/2013. Information on the reduced cap applying from 7 November 2016 can be found in HB Bulletin G9/2016 and in ADM Memo 27/16.

Gov.UK has further information about the benefit cap. Claimants who will potentially be affected by the cap should receive a letter as will their partners.

A benefit cap calculator is available on Gov.uk which provides an estimate of the amount that housing benefit may be reduced if the claimant's household income exceeds the cap. The DWP helpline on 0845 6057064 is available for individual claimants with queries about the benefit cap.