This information should not be relied upon as legal or professional advice. Read the disclaimer.

​​​​​Overview 

The benefit cap was introduced in 2013.  It limits the maximum amount in benefits a household can receive.  When originally introduced the cap was £500 a week (£26,000 a year) for a family, and £350 a week (£18,200 a year) for a single person.  From 7 November 2016 the cap was lowered and different rates now apply in London and elsewhere in Great Britain:​

  Family (couple or lone parent)     Single Person    
  Per year  Per month  Per week  Per year  Per month  Per week 
London £23,000  £1,916.67  £442.31  £15,410  £1,284.17  £296.35 
Elsewhere £20,000  £1,666.67  £384.62  £13,400  £1,116.67  £257.69 

The stated aims of the policy are: 

  • To promote a fair and healthy society and maintain public confidence in the welfare system, by imposing a reasonable limit on the total amount a household can receive. 
  • To reduce spending on benefits and encourage positive behavioural changes. 
  • To encourage more people into work. 

The Government have produced a benefit cap calculator which allows people to estimate how much their benefit might be capped. 

Note: the benefit cap should not be confused with the welfare cap which is a policy to limit the total amount the Government can spend on certain benefits. 

How is the cap applied?​​ 

The benefit cap applies to the total amount a household may receive. A ‘household’ includes the individual, their partner if they have one, and any dependent children who live with them. 

Working-age benefits such as Child Benefit, Child Tax Credit, Housing Benefit, Jobseeker’s Allowance and Universal Credit count towards the cap. The full list of benefits is available on GOV.UK.  

The cap is applied by making reductions to people’s Housing Benefit. For people claiming Universal Credit, their monthly UC payments are reduced. 

Exemptions​ 

People are not subject to the benefit cap if the household is entitled to Working Tax Credit (even if no WTC is in payment because of their income).  Universal Credit claimants are exempt from the cap if their household has earnings equivalent to at least the amount they would get for 16 hours per week at the National Minimum Wage for someone aged 25 or over. 

Households on UC no longer earning the minimum amount continue to be exempt from the cap for a 9 month ‘grace period’ if their earnings were above the threshold in each of the preceding 12 months. For households on Housing Benefit, the grace period applies where the claimant or their partner was previously in work for at least 50 out of the 52 weeks before the last day of work (provided the person wasn’t claiming Income Support, Jobseeker’s Allowance or Employment and Support Allowance while working). 

Households receiving certain benefits are also exempt from the cap – the full list can be found on GOV.UK. 

Housing benefit paid for some kinds of exempt supported accommodation is excluded in the calculation of the maximum welfare benefit entitlement. 

What can people do if they are affected by the cap? 

There is no right of appeal against a decision to apply the benefit cap. Claimants can however ask for a decision to be reconsidered if they think their benefit entitlement has been calculated incorrectly. 

For people affected by the cap, possible options include: 

  • Move into work, or if already in work increase working hours, to avoid the cap 
  • Check to see if someone in the household is eligible for a benefit that would exempt them from the cap 
  • Move to cheaper accommodation, or try to negotiate a rent reduction with the landlord 
  • Apply to the local authority for a discretionary housing payment for short-term help 
  • Draw up a budget and look at ways in which they might reduce their living costs 

Northern Ireland 

The benefit cap applies in Northern Ireland at the same rates applicable in Great Britain (outside London).  The same rules apply in Northern Ireland as in Great Britain, but a system of Supplementary Payments mitigates the impact of the benefit cap for families with children.   

Further information

Disclaimer

The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.

Image: Job Centre Plus / HelenCobain / CC BY 2.0