What is the benefit cap and how will it affect income and universal credit | Personal Finance

The government have a benefit cap in place to limit the total amount a person could receive. The cap applies to most people aged between 16 and the state pension age, which will be rising in October to 68. Some people who claim many benefits may inadvertently receive more than the cap. If this is the case their payments may be reduced by the government. According to the Money Advice Service, the maximum amount a claimant can receive in benefit income is dependant on where the claimant lives. The amount is higher for people who live inside London.

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The maximums are also impacted by the type of household. If the household is made up of a couple or if the claimant is a lone parent who has children living with them and they receive housing benefit, than the maximum benefit will be higher.

In these circumstances, the maximum amount that can be received is £1,916.67 a month for claimants living in London, or £1,666.67 a month for claimants outside London.

Money Advice Service provide links to the London Councils website which provides an interactive tool that details exactly what areas qualify as within London.

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Income and payments

Payments can be reduced if the claimant receives too much income (Image: GETTY)

London

The benefit cap is higher in London (Image: GETTY)

If the claimant is a single person and has no children that they are responsible for they could receive £1,284.17 a month as a maximum if they live in London.

They’ll be able to receive £1,116.67 outside of London. While the benefit cap will reduce the total amount of income received, it will only reduce this income from certain benefits.

The specific benefits the cap affects include:

Bereavement AllowanceChild BenefitChild Tax CreditEmployment and Support AllowanceHousing BenefitIncapacity BenefitIncome SupportJobseeker’s AllowanceMaternity AllowanceSevere Disablement AllowanceWidowed Parent’s Allowance (or Widowed Mother’s Allowance or Widow’s Pension if started before 9 April 2001)Universal Credit

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There are other caveats where the cap will not affect the claimant. It will not affect anyone over the state pension age.

The claimant will not be affected by the cap if they or their partner get working tax credit, universal credit if it’s received due to a disability or health condition which prevents work, universal credit for being a carer or get universal credit and the partners combined earn more than £569 a month after tax and national insurance contributions.

On top of this, the claimants will not be affected if they, they’re partner or any child under 18 living with them gets:

Universal Credit

The benefit cap will affect those on universal credit (Image: EXPRESS)

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Savers could receive a £1,200 bonus from this government account Armed Forces Compensation SchemeArmed Forces Independence PaymentAttendance AllowanceCarer’s AllowanceDisability Living Allowance (DLA)Employment and Support Allowance (if you get the support component)Guardian’s AllowanceIndustrial Injuries Benefits (and equivalent payments as part of a War Disablement Pension or the Armed Forces Compensation Scheme)Personal Independence Payment (PIP)War pensionsWar Widow’s or War Widower’s Pension

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Government

The Government can be contacted for assistance (Image: GETTY)

Evidently, there are a lot of elements to the benefit cap system and it could be easy for claimants to lose track.

The government seems to recognise this as they encourage claimants to call the department for work and pensions directly for assistance.

On top of this, the Money Advice Service provides many tips for those worried about losing income.

They provide a video detailing what should be done if a person is worried about covering their rent. There is also advice given for applying to a local authority for a discretionary housing payment and drawing up budgets.