THOUSANDS of families are set to lose cash from their Universal Credit and benefit payments, experts have warned.
Another 35,000 will fall under the benefit cap in the coming year, limiting the amount they can get.
That’s according to analysis by the Child Poverty Action Group (CPAG) and is on top of the 120,000 households already affected by the rules on how much people can claim.
The benefit cap is set at £20,000 a year for families, or £23,000 in London.
For individuals the limit is £13,400 a year or £15,410 for those living in the capital.
Universal Credit counts towards the cap, along with other benefits like child benefit, housing benefit and jobseekers allowance.
There are some exemptions when the benefit cap does not apply, for example if you’re entitled to working tax credits.
If your benefit payments are more than the cap then your Universal Credit or Housing Benefit is reduced.
The rules were first brought in by the government in 2013.
The limits have not increased since then despite rising inflation, leaving thousands of families worse of in real terms.
It means that anyone affected by the cap did not get the annual rise to benefits which came in April, effectively freezing the amount they get.
The impact on tens of thousands of families – the majority with children – is that they are now on average £1,840 worse off.
Without an increase to the benefit cap CPAG estimates that another 35,000 will hit the cap.
It comes as millions of households see the cost of living rocket, putting a serious squeeze on finances,
Inflation has hit 9.1% but rising prices are hitting those on the lowest incomes harder at closer to 11%.
Benefit cap “broken”
The charity’s boss Alison Graham said: “The cost of living crisis shows that the benefit cap is broken, and needs to go.
“It has always forced families to live on much less than they need, but as prices spiral the effects are brutal and more than 300,000 children are among its casualties.”
“In his cost-of-living support package the Chancellor recognised that families subject to the cap face the same cost pressures as everybody else.
“By the same logic, the cap must be removed to help the worst off families stay afloat.
“Next April’s uprating [of benefits] must be available to every family on benefits, as a bare minimum layer of protection against dramatically higher living costs.”
Everyone on Universal Credit and certain benefits will get a £650 cost of living payment.
Chancellor Rishi Sunak announced the help as part of a package of measures to help hard-up households.
The first half of the £650 payment is due to hit bank accounts from July 14 and a second will follow in the Autumn.
Those who are currently subject to the benefits cap will still get the payments.
The amount won’t contribute towards the benefit cap, and won’t push those nearing the limit over either.
It’s estimated that the cap on total benefit amounts sees households with children lose £236 on average each month and some lose as much as £400.
How much is the benefit cap?
The benefit cap outside Greater London is:
- £384.62 per week (£20,000 a year) if you’re in a couple
- £384.62 per week (£20,000 a year) if you’re a single parent and your children live with you
- £257.69 per week (£13,400 a year) if you’re a single adult
The benefit cap inside Greater London is:
- £442.31 per week (£23,000 a year) if you’re in a couple
- £442.31 per week (£23,000 a year) if you’re a single parent and your children live with you
- £296.35 per week (£15,410 a year) if you’re a single adult
What benefits count towards the cap?
- Universal Credit
- Bereavement Allowance
- Child Benefit
- Child Tax Credit
- Employment and Support Allowance
- Housing Benefit
- Incapacity Benefit
- Income Support
- Jobseeker’s Allowance
- Maternity Allowance
- Severe Disablement Allowance
- Widowed Parent’s Allowance (or Widowed Mother’s Allowance or Widow’s Pension if you started getting it before 9 April 2001)
If you’re over state pension age you won’t be affected by the benefit cap.
You also won’t have your payments limited if you get working tax credit, have limited capability to work because of a health condition or disability on Universal Credit, or look after someone else with a disability and get UC.
If you or your partner earn £617 or more a month combined, after tax and National Insurance contributions, you won’t be affected by the cap.
You may also get a nine-month “grace period” where the cap doesn’t apply when you first start claiming Universal Credit.
What can I do if I’m hit by the benefit cap?
You should check if you’re getting all the benefits you’re entitled to, charity Turn2Us suggests.
There are some benefits that are not subject to the cap, like Personal Independence Payment (PIP) and attendance allowance, so if you get these they can boost your income.
You can use a free benefits checker to see what you might be entitled to, but be aware it won’t be for certain until you apply.
Entitledto’s free calculator works out whether you qualify for various benefits, tax credits and Universal Credit.
If you don’t want to register, consumer group MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto’s data that let you save your results without logging in.
Use Policy in Practice’s calculator to not only find out which benefits you could receive but also to find out how much cash you’ll have leftover each month after paying for housing costs.
Charity Turn2Us’ benefits calculator works out what means-tested benefits you might be entitled to, as well as whether you qualify for carers allowance.
It points out that it doesn’t calculate non-means tested benefits and contributory benefits, but it will include these in your results if you’re already getting them.
If you’re on Universal Credit you could get extra help too, that tops up your income but doesn’t count towards the cap.
That includes a council tax discount and help with food and energy bills among the support.
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