A Big Change Could Mean Thousands in Benefits and Universal Credit Would Get a Pay Raise

THOUSANDS of benefit and Universal Credit recipients could see their wages rise as incomes are squeezed amid the cost of living crisis.

This is because the benefit ceiling could be raised after six years of maintaining the same level.

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Coins in pounds and banknotes.Credit: Getty

Since 2013, families applying for benefits and Universal Credit have faced a limit on how much they can get and that amount hasn’t increased since 2016.

But now the government has hinted the cap could be raised to tackle the soaring cost of living.

Therese Coffey, secretary for work and pensions, said she may review the cap as she is “slightly concerned about whether we have a true reflection of life” in the figure.

There is no guarantee the limit will be increased, but a review could take place by April next year when the annual benefit increase comes into effect.

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The current cap depends on where you live, but it’s currently set at £20,000 a year for families outside London, or £23,000 for those in London.

And for individuals it’s £13,400 a year, or £15,410 for those living in the capital.

If your benefit payments exceed the ceiling, your housing benefit or universal credit is reduced.

Although inflation continues to climb, forcing food and fuel prices to rise, the cap has affected more families.

According to analysis by the Child Poverty Action Group (CPAG), an additional 35,000 households could join the 120,000 others already affected by the cap if it does not increase next year.

What you can get under 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

The cap affects several benefits, including the following:

  • 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 receive certain benefits such as the Personal Independence Payment (PIP) or are over the statutory retirement age, you may not be affected by the benefit cap.

And if you’re applying for Universal Credit, the benefit cap may not start for another nine months, depending on your income.

Other help you can get if you are affected by the benefit ceiling

It’s worth checking to see if you’re getting all the benefits you’re entitled to to make sure you’re not missing out on extra income.

You can use a free benefits checker to check what you are entitled to, but note that this is only a guide.

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 does not calculate non-means-tested or contributory benefits, but it will include them in your results if you are already receiving them.

Entitledto’s free calculator checks if you’re eligible for several benefits, tax credits, and Universal Credit, but you need to create an account.

If you don’t want to register, consumer group MoneySavingExpert.com and charity StepChange also have benefit tools powered by data from Entitledto that allow you to save your results without creating an account.

Or you can 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.

If you don’t qualify for benefits, you may still be able to get the most out of other government plans.

For example, the Household Support Fund (HSF) has a £500m pot to distribute by October 2022, but you need to apply for a slice of the free money from your local council.

How much help you can get depends on your local council, but many give out food and fuel vouchers as well as free school meal vouchers.

If you’re a parent or mum-to-be on low income or on benefits, you may be eligible for Healthy Start vouchers which give you up to £442 a year for food.

We tell you everything you need to know about the Healthy Start program.

If the HSF or Healthy Start vouchers do not apply to you, you may be able to seek help from a food bank.

Find the nearest one by typing your postcode into the online search bar on The Trussell Trust website.

You will need to be referred by one of your local community organizations, as you cannot make a food bank claim yourself.

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Examples of these are schools, GPs or advice agencies such as Citizens Advice.

Here’s more information on how to get help from your local food bank.