Do you receive benefits?
Are you concerned about what the the benefit cap cuts might mean for your finances?
Then read on to find out how the new benefit cap the government plans to make may affect you.
In 2013 the ‘benefit cap’ was introduced in England, Scotland and Wales.
This meant that there was a limit to the amount of benefits a working age person could receive.
The cap was set to, and currently is, £26,000 – this means that even if you’re entitled to benefits which would come to more than £26,000, you won’t receive them because of the limit.
£26,000, or £500 a week, was the limit for couples and single parents regardless of the number of the children they have, and £350 a week was the limit for a single person with no children living with them.
However, the government is soon planning on reducing the cap from £26,000 to £23,000 – meaning the squeeze will be even greater for those depending on benefits!
Many of the people receiving common benefits such as Job Seekers Allowance, Child Benefit or Housing Benefit could be affected.
It’s important to note, however, that if you or anyone in your household is receiving or qualifies for Working Tax Credit, then you won’t be affected by the cap.
The complete list of benefits affected, explained on gov.uk, are:
- Bereavement Allowance
- Carer’s Allowance
- Child Benefit
- Child Tax Credit
- Employment and Support Allowance (if you don’t get the support component)
- Guardian’s Allowance
- Housing Benefit
- Incapacity Benefit
- Income Support
- Jobseeker’s Allowance
- Maternity Allowance
- Severe Disablement Allowance
- Widowed Parent’s Allowance
Benefits that aren’t affected are:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Industrial Injuries Benefits (and equivalent payments as part of a war disablement pension or the Armed Forces Compensation Scheme)
- Employment and Support Allowance (if you get the support component)
- War Widow’s or War Widower’s Pension
- War pensions
- Armed Forces Compensation Scheme
- Armed Forces Independence Payment
You’re also exempt from the benefit cap if you’re over the qualifying age for pension credit (usually this will exempt your partner to) or if you’re in a care home.
If you’re a carer looking after your partner or your child, you may be exempt because of the disability benefits of the person you’re caring for – although this is not automatic.
The qualifying age for Pension Credit is gradually going up to 66 as the State Pension age for women goes up to 65 and then it further increases to 66 for both men and women. Find out more about Pension Credit and when you could get it here.
What if I’ve just lost my job?
If you’ve just lost your job then you’re entitled to a ‘grace period’ where the benefit cap will not apply for up to 39 weeks after you leaving.
To qualify for this grace period you must have worked at least 50 of the last 52 weeks and must not have been claiming Income Support, Job Seeker’s Allowance or Employment and Support Allowance while you were working.
What if I’m on Universal Credit?
If you’re getting Universal Credit then there are a few differences.
For example, if you earn at least £430 (either alone or as a couple) then you’re exempt from the cap.
Equally if you’re getting the Childcare Costs from Universal Credit then that amount will stay the same, regardless of whether you go over the cap.
You should read this article from Citizen’s Advice about who’s exempt if you’re receiving Universal Credit.
If the benefits you receive are totaling more than the capped amount, your Housing Benefit will be reduced so that you are not exceeding it, although you must be left with at least 50p Housing Benefit a week.
If you’re receiving Universal Credit, then that is what will be reduced to make sure you’re not getting paid over the capped amount.
Whilst we’re still not sure when the benefit cap will be reduced to £23,000, it’s certainly going to affect a lot of people.
Don’t forget, we’re also here to help – you can take a browse through our many make money and save money articles for ideas.
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Just remember, there’s a lot of people and organisations out there to help you so don’t suffer in silence – reach out and there’ll be people to support you through.