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Benefit cap

The Department for Work and Pensions are sending out letters to households who may be affected by the benefit cap.  This is part of the wider Welfare Reform.

Letters will set out the intensive help that will be provided to get people into work as well as exemptions to the cap, online help and an information helpline.

Benefit Cap - What is it?

The benefit cap will apply to people aged 16 to 64, also known as 'working age'. The cap means that households where no one is in work should not get more in benefits than the average wage paid to people in work. This is after tax and National Insurance has been taken off. 

A household means you, your partner, if you have one, and any children you are responsible for and who live with you.

The benefit cap comes into effect in April 2013 and will limit the amount of benefit couples and lone parent households can receive to around £500 a week or £26,000 a year - the equivalent of the average household earnings after tax or a gross household salary of £35,000.

Benefit claims for single people will be limited to around £350.

What's included in the Benefit Cap

When added together the benefit cap will limit the total income you can get from the following benefits:

  • Bereavement Allowance
  • Carer's Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance (except where it is paid with the support componet)
  • Guardian's Allowance
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Jobseeker's Allowance
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widowed Parent's Allowance
  • Widowed Mothers Allowance
  • Widows Pension
  • Widows Pension Age-Related

Lord Freud said:

These reforms will restore integrity and fairness to a system that is failing the very people it was supposed to help.

We are now writing to all claimants who may be affected by the benefit cap setting out the exemptions and offering intensive advice on a supported return to work for those who are affected - but our message is clear, from April 2013, the state will no longer pay households more than the average wage in benefits.

The benefit cap will not affect a household if a member qualifies for Working Tax Credit, increasing the incentive to find work.

People affected by the benefit cap will receive personalised support to find work from Jobcentre Plus or their local Work Programme and Work Choice provider.

People who have lost their job but were employed for 12 months or more prior to claiming, may have 9 months before the benefit cap applies to them.

The benefit cap will also not apply to people who receive Disability Living Allowance (and its replacement Personal Independence Payment), Attendance Allowance, Industrial Injuries Benefits, the support component of Employment and Support Allowance, recognising the extra costs they face.

People who receive a War Widows or Widower's Pension will be exempt, as a part of the Government's commitment to those serving or who have served in the Armed Forces and to their dependents.

The Government has also provided councils with a fund of up to £120m to help people renegotiate rents or specific cases that need additional help with moving costs or other arrangements.

More Information about this change.

Telephone helpline: 0845 605 7064 or Textphone 0845 608 8551 for people with hearing or speech impairments.   Helpline is open from 8am to 6pm.

Online information can be found on the following links on the Direct Gov website:-

This page was last updated on 24-Apr-2014.

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