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Changes to Benefit

The Welfare Reform Bill has started to be introduced in stages starting from January 2012. The bill is expected to be in full force between April 2016 and April 2020.

What will this bill change?

  • it introduces Universal Credit which will be a single streamlined benefit
  • it sets to replace Disability Living Allowance with Personal Independence Payment
  • it introduces the Benefit Cap which will cap the amount of benefit that can be claimed
  • it introduces size criteria framework for people who rent from Housing Associations or renting a council property. This is to stop people from living in properties that are too big for their needs
  • it has created a new localised scheme for managing Council Tax Benefit
  • it has changed the Social Fund scheme which was managed by the Department for Work and Pensions

Benefit Change updates to date

Since the introduction of the Welfare Reform Bill there have been several updates and changes. The most important updates and changes are listed below.

Benefit Cap

There is currently a benefit cap in place restricting the amount in certain benefits that a working age household can receive. Any households receiving more than the cap has their Housing Benefit reduced to bring them back within the limit.

The benefits included in the cap include:

  • Bereavement Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance (unless you are in receipt of the ‘support’ component
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Jobseekers Allowance
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widowed Parents Allowance
  • Universal Credit (unless you have had a work capability assessment and aren’t fit for work)

You will not be affected by the cap if you or your partner work and either any of the following apply:

  • eligible for Working Tax Credit
  • get Universal Credit and the household income is more than £430.00 a month after tax and national insurance

You will also not be affected by the Benefit Cap if you, or your partner or any dependent child receives one of the following benefits:

  • Disability Living Allowance
  • Personal Independence Payment
  • Attendance Allowance
  • Industrial Injuries Benefits
  • Support component of the Employment and Support Allowance
  • War Widows and War Widowers pension
  • Working Tax Credit
  • Guardians Allowance
  • Carers Allowance
  • Carer element of Universal Credit

Current Benefit Cap

Couples with or without dependent children: £442 a week (living in London) £385 a week (rest of UK)

Lone parent with dependent children: ££442 a week (living in London) £385 a week (rest of UK)

Single person without children: £296 (living in London) £258 a week (rest of UK)

Benefit and Tax Credit rates changes

Working age benefits and tax credits will be frozen in cash terms for 4 years from April 2016.

Benefits included in the freeze are:

  • Jobseekers Allowance
  • Employment and Support Allowance
  • Income Support
  • Child Benefit
  • applicable amounts for Housing Benefit and Local Housing Allowance rates
  • Child Tax Credit and Working Tax Credit excluding any disability elements which are unaffected by the freeze 

Note: Disability benefits, the disability-related elements of tax credits and statutory payments will increase in line with the Consumer Prices Index.

Benefits excluded from the freeze are:

  • Pensioner benefits
  • Maternity Allowance
  • Statutory Sick Pay
  • Statutory Maternity Pay
  • Statutory Paternity Pay
  • Statutory Shared Parental Pay
  • Statutory Adoption Pay
  • The Employment and Support Allowance Support Group component
  • any disability, carers or pensioners' elements of benefits, other disability, carer and pensioner benefits, including PIP and DLA (which will continue to be updated in relation to prices or earnings as applicable)

Housing Benefit and Council Tax Reduction Changes

Restriction to 2 children in the Child Allowance

From April 2017 families will be restricted to 2 children in their personal allowance for Housing Benefit. This means that any new children born or moving into the household after this date will not be included in their allowance. From the 1st April 2018, new claims to the Council Tax Reduction Pensioner Scheme will be restricted to 2 children in the applicable amount under the same rules as has applied to working age claims since April 2017.

The only way additional children born or moving into the household after the 6th April 2017 can be included is if they are included on the Child Tax Credit assessment. For that to happen there needs to be an entitlement to Child tax Credit and meet the criteria to have more than 2 children included in the assessment.

De-minimus Changes

From the 1st April 2018, where the change in Council Tax Reduction (CTR) is less than 50p a week the entitlement will not be altered. This is known as a de-minimus change.

Claims will be amended so changes will need to be notified to the department as normal but if the change in the CTR entitlement is less than 50p a week then the weekly entitlement may remain unchanged.

Non Dependant Deductions

From the 1st April 2018, for all working age claims, there is a change to the non dependant deductions. (Please note this is for new non-dependants living in the household and for existing non-dependants).

For non dependants who work and any where they are NOT excluded from having a deduction, the deduction will be a flat rate of £10.00 a week.

(The normal exclusions apply where no deduction is taken).

Self Employed Minimum Income Floor (MIF)

From the 1st April 2018 the minimum income floor will be applied to all self employed people in receipt of Council Tax Reduction (CTR) once they have been trading for 12 months.

The MIF is set as below:

  • lone parents – 16 hours a week at the National Living Wage (£7.83) less the notional tax and NI applied to a self employed person - £122.34 a week
  • all others – 35 hours a week at the National Living Wage (£7.83) less the notional tax and NI applied to a self employed person - £251.60 a week

The minimum income floor will not be applied for the first 12 months of trading.

The MIF will be applied to all self employed incomes holding on the claimant or the partner.

Changes to size criteria allowance for disabled child, disabled non-dependent and disabled couples

From 1st April 2017 regulations changed to allow an extra bedroom in the size criteria for:

  • when a disabled child or disabled non-dependent adult requires, and has overnight care from a non-resident carer or group of carers
  • when a couple are unable to share a bedroom because of their disabilities

In order to qualify there must be proof that 

  • care has been arranged
  • a spare room is available for the carer
  • an extra bedroom has not already been provided for a non resident overnight carer or team of carers in the same household
  • in the case of couples not being able to share we will need to see proof that there is not enough room for the couple to share, taking into account medical equipment, hospital beds, hoists etc

In addition one of the following will need to be in payment:

  • middle or higher rate of Disability Living Allowance (Care Component) 
  • attendance Allowance
  • the daily living component of Personal Independence Payment or the Armed Forces Independence Payment

Other Benefit Changes

Child Tax Credit for 3 or more children

From April 2017 support provided through Child Tax Credit will be limited to 2 children, so that any subsequent children born after April 2017 will not be eligible for this support.

Page last updated: 26/10/2018