How much is the benefit cap?

The benefit cap is a ceiling on the total benefits most working-age households can receive. In Greater London it is £25,323 a year for couples and lone parents and £16,967 for single people without children; outside London the figures are £22,020 and £14,753. Rates are higher in London to reflect housing costs, and the same thresholds apply across England, Scotland and Wales — Northern Ireland runs its own scheme.

How the reduction is applied

The cap does not cut every benefit proportionately. It normally reduces your Universal Credit housing element (or Housing Benefit if you are not on UC) until the household total falls within the limit. That has an odd consequence for owner-occupiers: they are covered by the cap but usually receive no housing costs through UC, so the reduction comes out of the standard allowance instead. The DWP must notify you in writing, and the reduction shows on your UC statement.

Escaping the cap

Exemptions are absolute — once one applies, the cap is lifted entirely:

• Earnings. Working 16 or more hours a week at or above the minimum wage exempts the household. For many families a modest increase in hours is the fastest route out.
• Disability benefits. If anyone in the household receives PIP, the LCWRA element of UC, or certain other disability benefits, the cap does not apply. This is worth checking for children too: a child awarded DLA at the middle or highest rate care component, or higher rate mobility, exempts the whole household — but a diagnosis alone does not, the award must actually be in place.
• State Pension age. Households above pension age are outside the cap.

There is also a nine-month grace period for people who were continuously employed for the 12 months before claiming, which delays the cap while you look for work. It does not automatically cover previous self-employment, so get a Citizens Advice adviser to check whether the conditions are met in your case.

If the cap still applies, ask your council for a Discretionary Housing Payment to bridge the resulting rent shortfall, and query the calculation with the DWP straight away if you believe an exemption has been missed.