Managing the overall benefit caps

From October 2013, the total weekly benefits that a household can receive is limited to £350 a week for single people or £500 a week for single parents and couples. This overall limit incorporates all payments of:

  • bereavement benefits;
  • carer’s allowance;
  • child benefit;
  • child tax credit;
  • employment and support allowance (contribution-based and income-related) except where the support component has been awarded;
  • guardian’s allowance;
  • housing benefit;
  • incapacity benefit;
  • income support;
  • jobseeker’s allowance (contribution-based and income-based);
  • maternity allowance;
  • severe disablement allowance;
  • widow’s pension.

If a claimant or their partner is entitled to working tax credit, they are exempt from the cap. This exemption also applies if someone in the household is on certain disability-related benefits such as disability living allowance, personal independence payment or war pensions.

Initially the cap is applied by reducing housing benefit to the level set by the cap, although a 50p entitlement will always be maintained. Local authorities are responsible for implementing this reduction. Once universal credit has been introduced, the cap will be applied through reduction of this payment for those on working age benefits. Some families who may have continued to receive over £500 from October, due to their benefits being worth over this amount even after HB has been reduced, may thus see a further reduction in their income when they are transferred onto universal credit. Official DWP guidance says that other benefit income should be used to make up any shortfalls in rent arising as a result of reductions in housing benefit.1

The indicative loss per claimant comes from Impact Assessment statements.