In a new judgement (22 June 2017), the High Court has ruled that the application of the benefit cap to lone parents with children under two is unlawful because of its discriminatory impact. This specific group are less able to enter the workplace in order to relieve the effects of the cap.
The Government immediately announced that it will appeal against the ruling and said it had been granted permission to do so. The Department for Work and Pensions has issued guidance stating "while this is in train, DWP and local authorities should continue to apply the benefit cap as now. The legislation remains unchanged and so there is no change to the application of the cap to lone parents of children aged under two".
The benefit cap is a limit on the total amount of income from certain benefits a household can receive.
It is set at a different level depending on whether you live inside or outside London.
The benefit cap is:
If you are affected by the benefit cap your Housing Benefit or Universal Credit housing element will be reduced.
Previous benefit cap levels, before 7 November 2016, were £500 per week if you have children or are a couple, and £350 per week for single people with no children.
The benefits included when seeing if your benefit income exceeds the benefit cap are:
Council Tax Support, the replacement for Council Tax Benefit, is not included in the cap. One-off payments like the social fund are also not included.
You will not be affected by the cap if:
If you receive any of the following disability benefits you will be exempt from the cap:
The benefit cap is intended to increase work incentives so there is an exemption for households that are considered to be "in work." You will be considered in work and be exempt from the benefit cap if you are entitled to Working Tax Credit or receiving Universal Credit and earning at least the amount you would get for 16 hours per week on national minimum wage (see below).
The in work exemption for Universal Credit applies if your weekly earnings (after tax and national insurance) are equal to or greater than the equivalent of 16 times your National Minimum/Living Wage rate. When calculating the level of the earnings exemption threshold the amount is rounded down to the nearest whole pound so the required earnings from 1 April 2018 are as follows:
In addition, there is a “grace period” meaning that if your circumstances change because your job has ended there is a 39 week period before your benefits are reduced. This applies to people who are over the benefits cap but had been in work for at least 16 hours a week for 50 out of the 52 weeks immediately before their last day of employment.
You are still counted as employed when on statutory maternity leave, paternity leave, adoption leave or when receiving Statutory Sick Pay (SSP) so if you do not return to work the grace period would start the day after the period of leave ends, or the last day of payment of SSP. However, if you receive Employment and Support Allowance, Income Support or Jobseeker's Allowance during your period of leave, the grace period will start from the date you claim this benefit even if the statutory benefit is still in payment.
If you receive more than the benefit cap allows then your local council reduce your Housing Benefit or the DWP reduce your Universal Credit housing element until you are brought back within the cap.
Your local council may be able to provide some assistance through a Discretionary Housing Payment if you struggle to meet your housing costs as a result of the benefit cap.
Regulations have been brought in to introduce 'Welfare Supplementary Payments' to be paid to any households with children in Northern Ireland who have their benefit reduced due to the cap. The payments will match the amount by which their benefit is reduced, effectively meaning they are no worse off. These payments will remain until 31st March 2020.