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07 November 2016
You may have received a letter recently telling you that today (Monday 7 November) the benefit cap will be lowering. Letter or no letter, it can feel like a lot to get your head around, especially when there are figures and jargon flying all over the place. And, of course, the prospect of having a chunk less money can naturally be concerning, especially for those already getting by on a low income. So we've tried our best to break it down for you here, helping you to understand the changes and whether your household will in fact be affected at all. We hope it will put your mind at rest, but remember, if you're worried about getting into debt, you can always give us a call on 0800 328 0006.
What is the benefit cap?
The benefit cap is a limit set by the government on how much money working age people (aged 16 to 64) can claim in benefits per year. It was first introduced by the coalition government in 2013 (May 2016 in Northern Ireland) and was set at £26,000 for most dual and single parent households and £18,200 for most single people living without children. In July last year, the government announced it would be making £21bn worth of welfare cuts, which would include lowering the benefit cap.
What will be changed?
From Monday 7 November, the maximum amount of money you're allowed to claim each year will go down, and will depend on who you live with, where in the country you live and which benefits you are in receipt of. The cap will be jointly administered by the Department for Work and Pensions (DWP) and Local Authorities (LAs). Initially, it will be deducted from Housing Benefit payments and will eventually become part of the Universal Credit system. There's a chance you might not see any change immediately as the cap is set to be rolled out across several Local Authorities at a time from now up until the end of January 2017.
Who is included?
It's estimated that around 88,000 out-of-work households will be affected by the new cap. Most people between the age of 16 and 64 who currently claim benefits will see a change, but there are lots of exceptions.
Where can I find out more?
There's plenty more information on the government website and from the Money Advice Service. If you're still unsure whether or not your household in particular will be affected by the changes, try the benefit cap calculator which should give you a more individualised explanation.