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Checking whether the benefit cap applies

This is step 4 of a manual calculation. Every UC calculation and statement starts off with maximum amount of UC and then deductions are applied to this. In step 2 we looked at deductions for earned income and in step 3 we looked at other deductions.

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IMPORTANT: Before moving onto to see whether the benefit cap applies, you need to take your total from step 1 and deduct step 2 and 3. This will leave you with an amount of Universal Credit before. You may be affected by the benefit cap.

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Who the benefit cap does not apply to

The benefit cap doesn't apply to anyone who falls into one of the following categories:

  • You earn more than £793 in an assessment period (2023/2024)
    You will need to earn more than £722 in an assessment period for (2023/2024)

The benefit cap won't apply if you claim Universal Credit and earn at least the above amount in an assessment period.

If you are part of a joint claim, they will look at your combined earnings.

  • You're in a grace period

  • You or your partner get any of the following benefits:

    • Attendance allowance (AA)​

    • Disability Living Allowance (DLA)

    • Personal Independence Payment (PIP)

    • Carer's Allowance (CA) or Guardian's Allowance

    • Employment and Support Allowance (ESA) - support component

    • Universal Credit - Carer element or Limited Capability for Work-Related Activity element (LCWRA)

  • Your child or qualifying young person gets:​

    • Disability Living Allowance (DLA)​

    • Personal Independence Payment (PIP)

 

The 'grace period'

You may qualify for a 9 month grace period from the benefit cap if you, your partner or your ex-partner earned at least the following amounts a month, every month, for the past 12 months

  • £793 per month, if relevant to 2024/2025

  • £722 per month, if relevant to 2023/2024

  • £658 per month, if relevant to 2022/2023

When you first claim or if your earnings drop below £793 Universal Credit will ask you your past 12 months earnings to determine exemption from the benefit cap.

More information on exemptions to the benefit cap.

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If you are not affected by the benefit cap

The amount of UC you worked out in your manual calculation (total from step 1 and deduct step 2 and 3) will be your payment amount before deduction for advance repayments and debt deductions. You will be expected to pay your rent with this unless UC have made arrangements to pay this direct. You can view your scheduled payment after your assessment period ends.

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What is the benefit cap?

The benefit cap is the maximum amount a household can receive from benefits, unless an exemption applies. It can make it difficult for you to pay rent, purchase essentials or meet other household costs. The benefit cap on Universal Credit does not have the same rules as the benefit cap on housing benefit.

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What much is the benefit cap?

Your benefit cap amount depends on your household circumstances and is different for those living in London and those living outside of London. 

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Step 2

What benefits are included?

On Universal Credit, the benefits that count towards the benefit cap are:

  • Universal Credit (excluding the childcare element)

  • Child Benefit

  • Maternity Allowance

  • Bereavement Allowance

  • Employment and Support Allowance (unless you are in the Support Group)

  • ​Incapacity Benefit

  • Jobseeker’s Allowance

  • Severe Disablement Allowance

  • Widowed Parent’s Allowance (including widowed mother’s allowance and widow’s pension)

If you are receiving Universal Credit and receiving Housing Benefit separately from your local authority for temporary accommodation, this is not included in the benefit cap.

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UC will take into account a monthly amount of the above benefits regardless of their payment frequency.

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If your total amount is less than the benefit cap amount

If your Universal Credit (excluding the childcare element) plus any of the other benefits listed above comes to less than the benefit cap amount, the amount of UC you worked out in your manual calculation (total from step 1 and deduct step 2 and 3) will be your payment amount before deduction for advance repayments and debt deductions. You will be expected to pay your rent with this unless UC have made arrangements to pay this direct. You can view your scheduled payment after your assessment period ends.

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If your total amount is more that the benefit cap amount
If your Universal Credit (excluding the childcare element) plus any of the other benefits listed above comes to more than the benefit cap amount, a deduction will be made to your Universal Credit. The maximum you can receive is the benefit cap amount.
 

This will mean a deduction will show on your statement that reduces your UC payment to ensure you do not receive more that the benefit cap amount. An easier way to work out your payment if affected by the cap is to take the relevant benefit cap amount for your circumstances and deduct the other benefits you receive that count towards the cap (including child benefit). Remember that any childcare element you are entitled to will not count towards the cap.  

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Be sure to look at the the ways to be exempt to the benefit cap to see if there is an action you can take to have the benefit cap removed.

Example: applying for disability benefit for you/partner/child if they may be eligible or increasing your earnings.

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You will be expected to pay your rent with this unless UC have made arrangements to pay this direct. You can view your scheduled payment after your assessment period ends.

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If you are affected by the benefit cap, you should apply for a discretionary housing payment from your Local Authority.

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Need more help? Ask us here.

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