DWP cuts payments for 123,000 households on Universal Credit and Housing Benefit

72Point stock image of a hand pulling cash out of a wallet photographed on the 26/01/2023
-Credit: (Image: SWNS)


The Department for Work and Pensions has cut payments for 123,000 households receiving Universal Credit or Housing Benefit. This is the number who are now affected by the benefit cap, a limit on the maximum amount of financial support that working-age households can claim.

Latest figures show that the number of households hit by the cap has risen by 61 per cent (46,000) since the previous quarter. This is because overall benefit amounts and the local housing allowance all went up in April this year, producing a general rise in payments that has pushed some people over the levels of the cap. The extra amount they would have been due to get is then removed.

Universal Credit claimants won't see their payments reduced by the cap if they or their partner earn at least a joint total of £793 a month (after tax and National Insurance deductions), or if they have been signed off with 'limited capability for work and work-related activity' (LCWRA), which pays an extra amount for those who can't get a job on health grounds. The cap also doesn't apply to claimants who are caring for someone with a disability.

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The average amount taken off monthly Universal Credit payments because of the benefit cap was £256, a slight increase from £221 in the previous quarter. The majority (71 per cent) of households that have their benefits capped are single-parent families.

The benefit cap was introduced in April 2013 and was initially applied to Housing Benefit, and then to Universal Credit as it was rolled out. The majority of claims are now capped via Universal Credit.

The current levels of the benefit cap - which was put up for the first time in April 2023 but remains frozen for the 2024-2025 financial year - are as follows:

Benefit Cap (Greater London)

  • Couples (with or without children) or single claimants with a child of qualifying age: £25,323 a year, £2,110.25 a month, £486.98 a week

  • Single adult households without children: £16,967 a year, £1,413.92 a month, £326.29 a week

Benefit Cap (Rest of Great Britain)

  • Couples (with or without children) or single claimants with a child of qualifying age: £22,020 a year, £423.46 a week

  • Single adult households without children: £14,753 a year, £1,229.42 a month, £283.71 a week

The majority of households (118,000) affected by the cap are on Universal Credit, with the others (4,900) on Housing Benefit. It's not possible to claim both at the same time, as Universal Credit has its own built-in housing payment to help with rent.

Housing Benefit is among the legacy benefits that will be replaced by Universal Credit. Between April and June, 120,000 claimants on Housing Benefit coupled with tax credits were told to move to Universal Credit while 100,000 people only claiming Housing Benefit were sent letters between June and August telling them they must also make the changeover. Thousands more who get Housing Benefit alongside Employment and Support Allowance (ESA) are starting to receive the 'migration notice' letters this month.

As a result of the benefit switch, the number of capped households on Housing Benefit has fallen by three per cent in the latest figures while the number capped on Universal Credit has risen by 65 per cent. Universal Credit claimants will see any benefit cap deductions listed on their monthly statements.

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