Benefit cap on Universal Credit

The benefit cap can be worrying and causes lots of confusion, so we have put together some basic info that should help.

You need to know..

• The benefit cap is not the same thing as the 2 child cap.
• The benefit cap on Universal Credit has entirely different rules to people on Housing Benefit.
• It is possible to be benefit capped without claiming housing element.
• It is possible for someone to benefit capped by more than their housing element.
• The benefit cap does not apply and is not relevant as long as you earn above £604 in an assessment period. 
• Working 16 hours does not always guarantee that you will have enough earnings to remove the benefit cap.  It depends on how often you are paid.
• During a new claim you are asked a series of questions which are assessing your eligibility to the benefit cap 'grace period'.
• It may say on your statement that the grace period will apply from a certain month.  It says this even if you do not receive enough in benefits to be benefit capped or if you are exempt.
• If you are reading information about the benefit cap and it says anything about "39 weeks" or "50 in 52 weeks" then this only relates to Housing Benefit.  Universal Credit do not use the same rules.

What is the benefit cap?

The Government decided that if people weren't earning the equivalent of 16 hours a week at national living wage without a legitimate reason they couldn't (sick/caring/disabled/etc.), then they wouldn't allow them to have more than a certain amount in benefits per month. 

The current cap is:
Outside of Greater London Borough -

• Couple (with or without children) or a single parent - £1666.67 per UC assessment period
• Single person without children - £1116.67 per UC assessment period

If you live in a Greater London Borough

• Couple (with or without children) or a single parent - £1916.67 per UC assessment period
• Single person without children - £1284.17 per UC assessment period

How to be exempt from the benefit cap?

The benefit cap will not apply if -

• You earn more than £604 in an assessment period (£569 before April 2020).
• You (or your partner or child) are receiving:
  • Personal Independence Payment (PIP)
  • Disability Living Allowance (DLA)
• You (or your partner) are receiving
  • Attendance Allowance (AA)
  • Carer's Allowance 
  • Guardian's Allowance
  • Carers element of Universal Credit
  • Support component of Employment and Support Allowance (ESA)
  • Limited Capability for Work Related Activity (LCWRA) element of Universal Credit
  • Armed Forces Compensation Scheme Payments
  • Armed Forces Independence Payment
  • Industrial Injuries Disablement Benefit
  • War Disablement Pension
  • War Widow's or Widower's Pension
• You (or your partner) qualify for, but do not receive Carer's Allowance
• You (or your partner) are over Pension Credit age
• You are in the 9 month grace period

Which benefits count towards the benefit cap?

The benefits that count towards the cap, while on Universal Credit are:

• Universal Credit (not childcare element)
• Child Benefit
• Maternity Allowance
• Bereavement Allowance
• Employment and Support Allowance (unless you get the support component)
• ​Incapacity Benefit
• Jobseeker’s Allowance
• Severe Disablement Allowance
• Widowed Parent’s Allowance (including widowed mother’s allowance and widow’s pension)

When the benefit cap applies all other benefits are paid at their intended rate.  The deduction applies to Universal Credit and shows on your statement.

If I am awarded a benefit that removes the benefit cap for a backdated period, will the benefit cap be removed for the same period?

Yes it can be, but it may need to go to a Decision Maker first which can take a number of weeks and any underpayment due to you may be sent to debt management if you have outstanding debts.

The benefit cap should have applied and wasn't deducted.  What happens now?

This does happen and is more likely to happen with your first payment.  It means that you have been overpaid and when Universal Credit become aware your statement will be amended and you will have an overpayment letter attached to your journal.  Your debt will be allocated to debt management who will recover it in line with the rules for deductions for debt.

Am I eligible for the 'grace period'?

To qualify you, your partner or ex-partner must have earned at or above the level of the in-work exemption threshold in each of the previous 12 months.

• 2019/2020 - £569
• 2020/2021 - £604

If you are relying on work and earnings from an ex-partner, you must have been a couple during that period of work to qualify.

If you were working and not claiming Universal Credit, the grace period starts the day after the last date of employment.

If you were working and receiving Universal Credit, the grace period starts on the first day of the assessment period in which earnings fall below the relevant threshold.

If you move into work (and off of benefits) and then back out of work (and onto benefits), you resume the remainder of the grace period.

If you split from a partner during a grace period the remainder of the grace period is applied to both of you.

The benefit cap is applied in the assessment period after the one in which the grace period ends. 

Universal Credit do not always apply the grace period when they should.  You may need to confirm to your Case Manager that you qualify.

How to work out the amount that will be reduced.

First you need to work out your relevant Universal Credit amount.

TO WORK OUT RELEVANT UNIVERSAL CREDIT AMOUNT

You look at your full Universal Credit entitlement. This is total of all your elements,  (standard allowance, child element, housing element) with the exception of childcare element - which is ignored.

If you are unsure of your entitlement, you can use our guide - How Much Will My Payment Be?

If there are any deductions for earnings, income or capital then you deduct this amount.

You do not deduct for any advances, debts or sanctions.

This is your relevant amount of Universal Credit.

TO WORK OUT RELEVANT AMOUNT OF OTHER BENEFITS

Even although your other benefits may be paid weekly or fortnightly, etc - Universal Credit use the monthly amount.  

As an example, child benefit for 2 children is £34.40 per week.  As Universal Credit is monthly, you need to calculate the monthly figure. E.g £34.40 multiplied by 52 and divided by 12 equals £149.07

​The benefits that count towards the cap, while on Universal Credit are:

• Universal Credit
• Child Benefit
• Maternity Allowance
• Bereavement Allowance
• Employment and Support Allowance (unless you get the support component)
• Incapacity Benefit
• Jobseeker’s Allowance
• Severe Disablement Allowance
• Widowed Parent’s Allowance (including widowed mother’s allowance and widow’s pension).

If you receive Housing Benefit paid by your local authority because you are in temporary housing or specified housing, alongside your Universal Credit then do not include your Housing Benefit in the benefit cap amount.

ADD TOGETHER YOUR RELEVANT AMOUNT OF UNIVERSAL CREDIT AND OTHER BENEFITS

If this amount is more than your benefit cap threshold then you will be benefit capped by the amount in excess.​

	Eveywhere in Great Britain (except Greater London Borough)​	Greater London Borough
Single people with children	£1666.67 per month	£1916.67 per month
Couples (with or without children)	£1666.67 per month	£1916.67 per month
​Single person without children	£1111.67 per month	£1284.17 per month

I am capped and struggling.  What help can I get?

The Jobcentre can offer you extra support through extra work related appointments, referral for budgeting support, employment support to help you find work.  Do remember that you may be eligible for help with up to 85% of childcare costs if you start paid work.  You can ask your Work Coach about Flexible Support Fund for help with costs to remove barriers to work.

If you struggling to pay your rent you can apply to your local authority for Discretionary Housing Payment(DHP).