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Benefits Cap Changes to benefits 2013

Summary: This article explores the nature and the impact of the benefit cap introduced in 2013.

What is the benefit cap?

From April 2013, the Government is introducing a cap on the total amount of benefit that working-age people can receive. The cap will be set at the average net earned income of working households.

  • £350 per week for a single adult with no children.
  • £500 per week for a couple or lone parent, regardless of the number of children they have.

What will be cut?

Art first, the cap will only apply to those who receive housing benefit. However, eventually the cap will be applied by making deductions from payments of Universal Credit. This means that even if you're not currently affected by the cap because you don't get Housing Benefit, the cap could affect you if you start getting Universal Credit.

Who does the cap affect?

It doesn't apply to people who have reached the age to receive Pension Credit - although it may apply to someone in a mixed-age couple. You won't be affected by the cap if you qualify for one of the following benefits:

  • Working tax credits
  • Disability Living Allowance
  • Attendance Allowance
  • Industrial Injuries Benefits
  • The support component of Employment & Support Allowance
  • War Widow's or War Widower's Pension

Who are the most likely to see income reduced?

Broadly, the cap will affect large families with several children who are potentially in receipt of higher than average amounts of Child Tax Credit and are more likely to live in larger homes meaning Housing Benefit. It is estimated that 27% of households affected will have 5 or more children. 69% will have 3 or more. However smaller households may still be affected if they live in high rent areas and therefore receive larger amounts in Housing Benefit.

Preparing for change

Many will see overall income reduced. This may lead to real problems in maintaining debt repayments or creating new debt. Speak with a professional debt advisor to find out best options in such circumstances.

The above is provided as information only. Iva.co.uk does not provide debt advice. You must always seek professional advice before taking any action to resolve your debts.