More money is being paid out in benefits now than at any point since the welfare state began, and everyone will claim them at some point in their lives, whether it’s Universal Credit, the State Pension or Child Benefit.
But the government has put a limit on the amount that people claiming multiple benefits at once can get, known as the Benefit Cap.
The bad news for people claiming several types of benefits simultaneously is that the Benefit Cap is still frozen at its most recent £2,323 rate this year, depending on your circumstances.
The benefit cap is the government’s way of stopping people from claiming more than a certain amount in a single tax year, through a combination of different benefits.
If your total entitlement to benefits included in the cap is more than the Benefit Cap amount, and the Benefit Cap applies to you, your benefits will be reduced to bring you in line with the cap amount instead.
From April 2023 to April 2024, the new Benefit Cap in London was increased by £2,323 for a couple, up from £23,000 to £25,323.
For a single adult household without kids in London, the amount has increased by £1,557 from £15,410 to £16,967.
Outside London, the amounts went up by £2,020 for couples from £20,000 to £22,020, and for single households without kids by £1,353, from £13,400 to £14,753.
If you claim Housing Benefit, the amount you get each week will be reduced to the cap. The same goes for Universal Credit (except for childcare costs, which is protected from being taken into account in the cap).
The government is obligated to review the cap every five years but the new Labour government has not made any promises to review the cap again before 2027-2028, when it would next be mandated to consider it.
The previous Conservative Government said in its review of benefits: “This (2023) was the first time the cap has been increased. The cap will remain frozen at these levels in 2024/25.”
Benefits not included in the cap include Statutory Sick Pay, Statutory Maternity Pay, PIP (Personal Independence Payment) and Attendance Allowance, among others.
It also doesn’t apply to people working 16 hours per week at National Living Wage, or to people claiming Disability Benefit
There is also something called the ‘grace period’. This is where the benefit cap might not affect your Universal Credit payments for up to 9 months. You’ll get the grace period if all of the following are true: you’re claiming Universal Credit because you stopped working or your earnings went down; you’re now earning less than £722 a month; in each of the 12 months before your earnings went down or you stopped working, you earned the same as or more than the earnings threshold (this was £658 up to 10 April 2023 and is £722 from 12 April 2023).
Your partner’s earnings will be included when working out how much you earned even if they’re not claiming benefits. If you have separated from your partner, their earnings will be included for the time that you lived with them before you separated.
You need to report your last 12 months’ earnings when you apply for Universal Credit to get the grace period.
