What is the benefit cap?

What is the benefit cap?
What is the benefit cap? Photo: Kirsty Wigglesworth/PA

From Monday the new benefit cap will begin a pilot in four London boroughs before being rolled out nationally on 15th July.

The changes will first be introduced in Bromley, Croydon, Enfield and Haringey.

It will then follow in all other council areas between 15th July and and 30th September 2013.

What is the benefit cap?

The benefit cap will affect the amount of benefit that people of working age (16-64) can claim.

The full list of benefits that count towards the cap:

  • Bereavement Allowance
  • Carer’s Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance (except where it is paid with the support component)
  • Guardian’s Allowance
  • Housing Benefit whether paid direct to you or to your landlord (but not including Housing Benefit paid for Supported Exempt Accommodation)
  • Incapacity Benefit
  • Income Support
  • Jobseeker’s Allowance
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widowed Parent’s Allowance
  • Widowed Mother’s Allowance
  • Widow’s Pension, including the Age-Related component

The cap will be set at £500 per week for a couple (with or without children) and for lone parents and £350 per week for single adults.

Read more: Welfare benefit changes - What is changing in April

Exemptions from the benefit cap

Those entitled to:

  • Working Tax Credit

Those in receipt of:

  • Disability Living Allowance
  • Personal Independence Payment (from April 2013)
  • Attendance Allowance
  • The support component of ESA
  • Industrial Injuries Benefits (and equivalent war disablement pensions and payments under the Armed Forces Compensation Scheme)
  • War Widows and War Widowers pension

Claimants who have been in employment for 52 weeks or more when they claim benefit will be exempt from the cap for a grace period of up to 39 weeks.

Adult children living in a household, and receiving a benefit in their own right, would not normally count as part of that household for the purposes of the benefit cap.

Find out if you will be affected and how your benefits could be reduced

Reaction to the benefit cap

The benefits bill is rising under this Government because our economy is flatlining, inflation is rising and unemployment is high.

The best way to get the benefits bill down is to get our economy growing strongly and get people back to work.

– SHADOW CHANCELLOR ED BALLS

For too long, we've had a system where people who did the right thing - who get up in the morning and work hard - felt penalised for it, while people who did the wrong thing got rewarded for it.

That's wrong.

Those who campaign against a cap on benefits for families who aren't working are completely out of touch with how the millions of working families, who pay the taxes to fund these benefits, feel about this.

With all our welfare changes, we're simply asking people on benefits to make some of the same choices working families have to make every day.

– CHANCELLOR GEORGE OSBORNE

If the Government is to meet its legal duty to eradicate child poverty by 2020, it must review the cap on benefits increases and act now to support those families struggling to provide for their children by helping them to afford to work and manage the rising costs of living.

– ANNE MARIE CARRIE, BARNARDO'S

Find out more about the Universal Credit on the DWP website