TENS of thousands of families risk having their Universal Credit and benefit payments cut in April, experts have warned, despite rates increasing with inflation.
The government revealed in last months Autumn Statement that millions will get a payment boost of up to £470 a year.
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Each year rates are increased to keep up with the cost of living. This is usually in line with the rate of inflation.
Chancellor Jeremy Hunt confirmed the annual benefit uprating will be 6.7% affecting around 5million people.
For instance, the monthly standard allowance for over 25s on Universal Credit will rise by £19.57 to £311.68.
On average people will be £470 a year better off, but the exact amount will depend on each individual’s entitlement, like if they have children or housing costs.
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But key documents published by the government since the announcement reveal that a key amount will not increase, leaving some families worse off.
The benefit cap, first introduced in 2013, is a limit on the total amount households can get.
It was frozen from 2016 until this year, when the government increased it to £22,020 a year for families, or £25,323 in London, and £14,753 for single adults, or £16,967 in the capital.
But there will be no similar rise next year, leaving 80,0000 on Universal Credit worse off.
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Halide Kalfaoglu, benefits expert at Turn2us, said: “The majority of those affected are families with children and single parents who will struggle to afford life’s necessities like energy bills and basic food shopping.
“They cannot keep absorbing real-term income cuts because that’s what this amounts to; less money when we know the cost of everything is increasing.”
Some 85,000 households already have their benefit payments docked because of the cap and lose around £53 a week on average.
More people are set to hit the cap in April when benefit payments rise in April, 2024.
Alison Garnham, chief executive of Child Poverty Action Group (CPAG), said: “Families hit by the policy are some of the poorest in the country and they’re going to fall even further behind as prices continue rising but their benefits are capped at an arbitrary limit.
“Sadly the number of affected families will grow as more people are newly capped when benefits are uprated as usual next April.
“The losses for capped families are huge – averaging £53 a week but sometimes much more.
“There isn’t a rhyme or reason for the benefit cap. It’s illogical, denies families what they need and is actively pushing children into poverty.”
Although many benefits rise with inflation each year, there’s no requirement in law that the benefit cap is one of them.
But the government must review the cap at least once every five years.
A DWP spokesperson said: “The benefit cap remains the same. There is no statutory obligation for the Secretary of State to review the benefit cap levels again this year following the significant increase following the review in November 2022.”
What is the benefits cap?
First brought in by the government in 2013, the benefit cap sets a limit on the total amount of benefits households can get.
Universal Credit counts towards the cap, along with other benefits like child benefit, housing benefit and jobseekers allowance.
And if your income is above this limit, your housing benefit or Universal Credit might be reduced.
The benefit cap outside Greater London is:
- £423.46 per week (£1,835 per month) if you’re in a couple or if you’re a single parent and your children live with you
- £283.71 per week (£1,229 per month) if you’re a single adult
The benefit cap inside Greater London is:
- £486.98 per week (£2,110 per month) if you’re in a couple or if you’re a single parent and your children live with you
- £326.26 per week (£1,413 per month) if you’re a single adult
You won’t be affected by the benefit cap if you or your partner:
- Are claiming working tax credit, even if you have a nil award
- Are over Pension Credit age.
- Get Universal Credit because of a disability or health condition that stops you from working. Or because you care for someone with a disability
- Get Universal Credit and you and your partner’s monthly combined income is more than £658 after tax and National Insurance contributions.
You can use the benefits calculator on the Turn2Us website to check whether you are affected or will be affected by the benefit cap from April 2024.
It’s important to note that in some circumstances some households can get up to a nine-month benefit cap grace period.
If you are claiming Universal Credit, the benefit cap will not be applied for a nine-month grace period if:
- You (or your partner) earned at least £722 per month for each of the previous 12 months.
If you are claiming Housing Benefit, the benefit cap will not be applied for a 39-week grace period if:
- You (or your partner) were working for at least 50 out of the previous 52 weeks, and
- Whilst you (or your partner) were working, you were not entitled to income support, jobseeker’s allowance (JSA) or employment and support allowance (ESA).
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.
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.
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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 left over each month after paying for housing costs.
