CBHA employee with resident

Information about the Government’s Welfare Benefit legislation

 

Benefits Cap

The Government introduced an upper limit on the amount of benefits a person can receive in April 2013. The limit will be set at the average earnings (after tax is paid) for a working household.

  • Single people will be limited to approximately £350 a week, including housing costs.
  • Couples and lone parent households will not be able to claim more than £500 a week (approximately), including housing costs.

Exemptions from the benefits cap are:

  • Households where someone qualifies for Working Tax Credit, increasing the incentive to find work.
  • People who have lost their job will have 9 months before the Benefit Cap. applies to them if they were employed for 12 months or more prior to claiming.
  • Claimants of Disability Living Allowance, Attendance Allowance and Industrial Injuries Disablement Benefits.
  • Recipients of a War Widow’s or Widower's Pension.

Visit the official Government site for more information on the benefit cap – including a calculator

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Universal Credit

For people of working age, all benefits will be replaced with a Universal Credit.  The maximum a single person will receive a week is £350 and for couples it will be £500.  

The Government intend to pay the Universal Credit in monthly arrears, the same way that most people receive their salary from a job.  Payments will be made by directly into a bank account. This means that all benefit claimants will need a bank account. If you are in a couple, you must claim jointly and you will have to decide which partner receives the payment.

The following benefits will be abolished and replaced by Universal Credit:

  • Income Support (IS)
  • Income-based Job Seekers Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Housing Benefit (HB)
  • Child Tax Credit (CTC)
  • Working Tax Credit (WTC)


Housing Benefit will be replaced by the Universal Credit, which will be paid directly to you, not to CBHA. This means that all tenants will have to pay full rent.

In order to claim the Universal Credit, you must be:

  • Aged at least 18 years old.
  • Habitually resident with a ‘right to reside’ and not be subject to immigration control.

No-one with capital over £16,000 will be able to claim the Universal Credit. For capital between £6,000 and £16,000, there will be a ‘tariff’ of £1.00 for every £250. Note: couples’ capital will be assessed jointly.

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Housing Benefit

Your Housing Benefit will be reduced if you have other adults living with you.  These people are called ‘non-dependants’ and it is assumed that they will be contributing to the rent.  

The reductions will increase significantly over the next few years. If these adults work the money deducted from your benefit is much higher.  If you’re living with adults it might make sense to talk to them about what they pay towards the cost of running your home.

From 2013, Housing Benefit will be added to a new benefit called Universal Credit.  The Universal Credit is paid directly into your bank account – this has 2 big impacts:

  • Bank account – you will need a bank account to receive the Universal credit.
  • Full rent - you will need to pay CBHA full rent.  

Visit the official Government site for more information on changes to Housing Benefit 

 

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Under Occupancy (Bedroom Tax)

There are new size criteria for Housing Benefit claims (also known as ‘under-occupation penalty’ or ‘Bedroom Tax’). The criteria means that any working-age household that is under-occupying their home lost part of their Housing Benefit from April 2013. 

Measuring ‘under occupancy’

The size criteria in the social rented sector restricts Housing Benefit to allow for one bedroom for each person or couple living as part of the household, with the following exceptions:  

  • Children under 16 of same gender are expected to share
  • Children under 10 are expected to share, regardless of gender
  • Disabled tenants or partners who need a non-resident overnight carer will be allowed an extra room.  

Any household that has more bedrooms than the criteria allows loses a proportion of their Housing Benefit. Examples of households affected by the measure include:  

  • Separated parents who share the care of their children and who may have been allocated an extra bedroom to reflect this. Benefit rules mean that there must be a designated ‘main carer’ for children, who receives the extra benefit.      
  • Couples who use their ‘spare’ bedroom when recovering from an illness or operation.        
  • Foster carers because foster children are not counted as part of the household for benefit purposes.
  •   
  • Parents whose children visit but are not part of the household.
  • Families with disabled children.
  • Disabled people including people living in adapted or specially designed properties.                  

Reductions in Housing Benefit – how much do people lose?

People lose a fixed percentage of the Housing Benefit-eligible rent. The initial rates are:

  • 14% for 1 extra bedroom
  • 25% for 2 or more extra bedrooms

The higher your rent, the higher the amount of money that will be deducted from your Housing Benefit each week. The Government estimates that the average reductions will be £14 per week for people with one extra bedroom and £25 per week for people with 2 or more extra bedrooms.

So, for example:  If you are renting a two-bedroom property with a rent of £82.40 per week and you are under occupying the property by one bedroom you: 

  • Have a deduction of 14% Housing Benefit equalling £11.54 per week
  • Only receive £70.86 Housing Benefit against the rental charge of £82.40 and will be expected to pay the shortfall £11.54 yourself

If you are renting a 3 bedroom house with a rent of £86.65 per week and you are under occupying the property by two bedrooms you will:  

  • Have a deduction of 25% Housing Benefit equalling £21.66 per week
  •  
  • Only receive £64.99 Housing Benefit against the rental charge of £86.65 and will be expected to find the shortfall of £21.66 from other income or benefits

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Incapacity Benefit

If you receive Incapacity Benefit and will not reach retirement age soon, you will be contacted to have your benefit entitlement reassessed before conversion to Employment and Support Allowance (ESA).

You will have to fill out a questionnaire, and are likely to be called for a medical assessment. In most cases Employment and Support Allowance awards will last for 1 year, although there will be exceptions.

Visit the Government website for more information on Incapacity Benefit and the replacement Employment and Support Allowance

 

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Working Tax Credits

A couple with children are now required to work 24 hours a week in order to qualify for Working Tax Credits.  This is an increase from the previous level of 16 hours.  

Tax credit claims can also only be backdated 1 month rather than 3 months.

Visit the HMRC website for more information on Working Tax Credits 

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Contacts for more advice

If you think these benefit changes will cause you financial difficulties, CBHA have Money Advice and Welfare Benefits Advice services that can provide free confidential help and support. Contact the CBHA for further information.

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