THOUSANDS of families are on the verge of losing money from their Universal Credit and benefit payments, experts have warned.
Another 35,000 will fall under the benefit cap in the coming year, limiting the amount they can get.
This is according to analysis by the Child Poverty Action Group (CPAG) and adds to the 120,000 households already affected by the rules on how much people can claim.
The benefit cap is set at £20,000 a year for families, or £23,000 in London.
For individuals, the limit is £13,400 a year or £15,410 for those living in the capital.
Universal Credit counts towards the cap, along with other benefits such as Child Benefit, Housing Benefit and Jobseeker’s Allowance.
There are certain exemptions where the benefit ceiling does not apply, for example if you are entitled to working tax credits.
If your benefit payments exceed the ceiling, your Universal Credit or Housing Benefit is reduced.
The rules were first introduced by the government in 2013.
The limits have not increased since then despite rising inflation, leaving thousands of families worse off in real terms.
This means that anyone affected by the cap did not get the annual increase in benefits that came in April, freezing the amount they receive.
The impact on tens of thousands of families – the majority with children – is that they are now on average £1,840 worse off.
Without an increase in the benefit ceiling, the CPAG estimates that another 35,000 people will reach the ceiling.
It comes as millions of households see the cost of living skyrocket, taking a heavy toll on their finances,
Inflation hit 9.1%, but rising prices are hitting those with the lowest incomes the hardest, at nearly 11%.
“Broken” benefit ceiling
The charity’s boss, Alison Graham, said: “The cost of living crisis shows that the ceiling on benefits has been exceeded and must go.
“It has always forced families to live on far less than they needed, but with prices soaring the effects are brutal and over 300,000 children are among its victims.”
“In his cost of living support package, the Chancellor acknowledged that families subject to the cap face the same financial pressures as everyone else.
“In the same logic, the cap must be removed to help the poorest families to stay afloat.
“Next April’s upgrade [of benefits] must be available to all families receiving benefits, as a minimum layer of protection against significantly higher living costs. »
Everyone on Universal Credit and certain benefits will receive a cost of living payment of £650.
Chancellor Rishi Sunak announced the aid as part of a package of measures to help struggling households.
The first half of the £650 payment is due into bank accounts from July 14 with a second to follow in the autumn.
Those who are currently subject to the benefit cap will still receive the payments.
The amount will not contribute to the benefit cap, nor will it push those approaching the limit.
The cap on the total amount of benefits is estimated to cause households with children to lose an average of £236 each month and some lose up to £400.
How high is the benefit limit?
The cap for benefits outside Greater London is:
- £384.62 per week (£20,000 per year) if you are in a relationship
- £384.62 per week (£20,000 per year) if you are a single parent and your children live with you
- £257.69 per week (£13,400 per year) if you are a single adult
The benefit cap in Greater London is:
- £442.31 per week (£23,000 per year) if you are in a relationship
- £442.31 per week (£23,000 per year) if you are a single parent and your children live with you
- £296.35 per week (£15,410 per year) if you are a single adult
What benefits count towards the cap?
- Universal Credit
- Bereavement allowance
- Family allowances
- Child tax credit
- Employment and Support Allowance
- Housing allowance
- Incapacity benefit
- Income support
- Job search allowance
- Maternity allowance
- Severe Disability Allowance
- Widowed Parent’s Allowance (or Widowed Mother’s Allowance or Widow’s Pension if you started receiving it before 9 April 2001)
If you are over the legal retirement age, you will not be affected by the benefit ceiling.
Your payments also won’t be limited if you get a working tax credit, have a limited ability to work due to a health condition or disability on Universal Credit, or are caring for a another disabled person and get UC.
If you or your partner earn £617 or more a month combined, after tax and national insurance contributions, you won’t be affected by the cap.
You can also benefit from a nine-month “grace period” during which the cap does not apply when you start claiming Universal Credit.
What can I do if I am hit by the benefit cap?
You should check to see if you’re getting all the benefits you’re entitled to, suggests the charity Turn2Us.
Some benefits are not subject to the cap, such as the Personal Independence Payment (PIP) and Attendance Allowance, so if you get them they can increase your earnings.
You can use a free benefits checker to see what you might be entitled to, but be aware that it won’t be certain until you apply.
Entitledto’s free calculator determines whether you qualify for various benefits, tax credits, and Universal Credit.
If you don’t want to register, consumer group MoneySavingExpert.com and charity StepChange both have benefit tools powered by data from Entitledto that allow you to save your results without logging in.
Use Policy in Practice’s calculator not only to find out what benefits you might receive, but also to find out how much money you’ll have left each month after paying housing costs.
The Charity Turn2Us Benefits Calculator determines which means-tested benefits you may be eligible for, as well as whether you are eligible for Carer’s Allowance.
It points out that it does not calculate non-means-tested and contributory benefits, but it will include them in your results if you are already receiving them.
If you’re on Universal Credit, you can also get extra help, which supplements your income but doesn’t count toward the cap.
This includes a council tax reduction and help with food and energy bills among the support.
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