The government is changing the way that many benefits and tax credits are paid and how much benefit people will be entitled to.
If you are claiming benefits or tax credits now or could be in the future it’s important that you understand the changes and how they could affect you.
If you want to find out more or would like some support, you can talk to one of our money advice officers. Contact our customer service centre to make an appointment.
You can also get free and impartial advice from the Money Advice Service.
The government is replacing some benefits for people who are working age with one new benefit called Universal Credit.
Universal Credit is replacing Housing Benefit, Income Support, Job Seekers Allowance, Employment Support Allowance, Child Tax Credits and Working Tax Credits.
It is being introduced gradually. At the moment it mainly affects people who are claiming for the first time, but more and more people will have to claim Universal Credit as it is rolled out.
If you do not receive Universal Credit you will be getting your benefits paid separately from different places. For example Tax Credits are paid by the Inland Revenue and Housing Benefit is paid by your council. Universal Credit joins all these benefits together into one monthly payment.
There are two big changes that will happen when your Universal Credit starts:
- Payments are made once a month in arrears
- You will no longer have the option to have your Housing Benefit paid to us as your landlord unless you are classed as vulnerable or you are in arrears.
- Your Housing Benefit will be part of your monthly Universal Credit payment. You are then responsible for paying your rent to us. You must manage your benefit to make sure that you pay the rent on time or you may lose your home.
The government has put a cap on the overall amount of benefit an out of work household can receive.
The cap was £350 a week for a single person and £500 a week for a family but the cap is going down to £258 a week for single people and £385 a week for a couple. This change is happening gradually from November 2016.
The benefit cap does not affect households that get Disability Living Allowance, Working Tax Credit, War Widows pensions or certain carers and guardians
The cap on benefits includes any Housing Henefit or help with housing costs through Universal Credit you are entitled to.
If your benefit is capped your Housing Benefit will be cut by the amount you are over the cap. Your council will write to tell you if your housing benefit is being cut because of the benefit cap.
You must make sure that your rent is paid in full so if your benefit is capped you will have to pay the difference yourself out of your income.
You can find out more at gov.uk/benefit-cap
If you need help to pay your Council Tax, contact your council to see if you can claim Council Tax Benefit.
The government has changed the rules which mean your Housing Benefit or the housing element of Universal Credit is cut if you have more bedrooms than the rules say you need. This change is called under occupation charge or is sometimes known as the bedroom tax.
If you have one spare room your housing benefit will be cut by 14%, if you have two or more spare rooms it will be cut by 25%.
If your Housing Benefit or the housing element of Universal Credit is cut you will have to pay the difference yourself out of your benefits or wages.
Who will be affected?
- People of working age who are under occupying their homes and claiming Housing Benefit or the housing element of Universal Credit.
Visit Shelter.org.uk to find out how many bedrooms you are allowed.
What can you do?
If you feel you can’t afford to pay the extra amount and want to move to a smaller property please see our Find a Home section.
You can also register an interest in exchanging your property on Homeswapper.
You may also want to consider taking in a lodger but before you do this please take advice as this could affect your other benefits.
You may also be able to apply to your council for a Discretionary Housing Payment to help to pay the under occupation charge.
Changes effect all new tenancies signed after 1 April 2016 and all those on Universal Credit
From 1 April 2019 new rules will cap how much Housing Benefit or help with rent through Universal Credit can be paid for a housing association or council property. Benefit will only be paid at the same level as for privately rented tenancies in your area. This restriction is known as Local Housing Allowance or LHA.
The amount of help you get towards your rent will be capped at the LHA rate that applies to you. The LHA rate used will depend on your family size and the number of bedrooms you are considered to need.
You can find out the number of bedrooms you need and the LHA rates for your area here.
If the rent on the property you are moving into is more expensive than the local LHA rate the maximum help you can get will be capped. If it is less expensive you will be able to get benefit up to the actual rent, the amount you get will depend on your circumstances.
These changes may mean that you will get less Housing Benefit in 2019 than you do under the current rules.
If this is the case you will have to pay the difference between your Housing Benefit and the rent yourself. If you are thinking about taking on a new tenancy you will need to think about if you can afford to do this.
Here are some examples of how people may be affected
If you are single, aged under 35 and have no children living with you will only receive LHA for a room in shared accommodation even if the home you live in is self contained and you do not share with anyone else.
A couple with a son of 8 and a daughter of 6 will be allowed the two bedroom rate of LHA. This is one bedroom for the couple and one bedroom for the children as they are both under the age of ten and are expected to share.
A single parent with a one year old child will be allowed the two bedroom rate of LHA.
A couple living on their own in a three bedroom property would only be entitled to one bedroom rate for LHA.
There are different rules for people who live in supported housing – please contact us for more details.
1. Get a benefits check
Make sure that you are getting all the benefits that you are entitled to. You can do a benefit check at entitledto.co.uk.
2. Look at your monthly budgeting
As it’s paid once a month you may need to change the way you organise your money. If you are worried about budgeting visit the Money Advice Service.
3. Get a bank account
Having a bank account is important so that you can have your benefits and wages paid in and use it to pay your bills.
4. Set up direct debits
Direct debits are one of the best ways to make sure that your bills are paid on time. The easiest way to set up a direct debit is to contact our customer service centre who will set it up for you over the phone.
5. Paying off any debts, especially rent and other priorities
It’s important to get your finances in order and get any debts under control.
6. Get online
Being online and being able to use the internet has never been more important. All Universal Credit claims will need to made online.
7. Getting into employment
Universal Credit aims to make sure that moving into work or extending your working hours will leave you with more money.