Welfare reform update

Changes to housing benefit from April 2013 – will you be affected?

The UK government has made a number of changes to welfare benefits, which are due to start taking effect in 2013. Changes of this kind are known as welfare reforms. In this section of the site we take a closer look at two reforms to housing benefit, which are expected to start from 1st April 2013. These are known as the bedroom tax and the benefit cap.

Please note: If you have (or your partner has) reached pension credit age by 1st April 2013, then you will be exempt from both the bedroom tax and the benefit cap.

How can I tell if pension credit age will be reached by April 2013?

  • If you (or your partner, if you have one) were born before 6th October 1951, then you (or your partner) will have reached pension credit age by 1st April 2013, and you will not be affected by the bedroom tax or by the benefit cap
  • If you (and your partner, if you have one) were born after 5th October 1951, then neither you nor your partner will have reached pension credit age by 1st April 2013, and you may be affected by the bedroom tax or the benefit cap.

Please read on to find out more about these changes...

The bedroom tax

From April 2013, if you are a tenant of a social landlord and you are under pension credit age, there may be a reduction in the amount of housing benefit that can be paid, where it is decided that your house has at least one ‘extra bedroom’ that is not needed for the size of your household. This is often called ‘the bedroom tax.’  In the private rented sector, housing benefit has been based on household size for a number of years.  The bedroom tax is the first attempt to introduce such a rule for social housing tenants.

Please note: If you are a housing association tenant who receives a housing support service from your landlord, then you should be exempt from the bedroom tax, regardless of age.

What number of bedrooms is allowed?

This will depend on things like the number of people living in the house, and on what their circumstances are.  One bedroom is allowed for a couple, and then further bedrooms may be added according to who else stays in the house.  No bedroom is allowed for a foster child, or for anyone, child or adult, whose main home is elsewhere.

The bedroom allowance works like this:

  • One bedroom for a couple
  • One bedroom for a person age 16 or over
  • One bedroom for 2 children (under 16) of the same sex
  • One bedroom for 2 children who are under age 10
  • One bedroom for any child (under 16) not in the above categories
  • One further bedroom where the person claiming housing benefit, or her/his partner, needs someone to provide her/him with overnight care (only one bedroom can be allowed for this, no matter how many carers are needed)

If your house has more bedrooms than the number allowed, and you are under pension credit age, then the amount of housing benefit that you can get would be reduced (but see below for who will be exempt).

Who will be exempt from the bedroom tax?

It is expected that you will be exempt from the bedroom tax if any one of the following is true:

  • You have, or your partner has, reached pension credit age (see “How can I tell if pension credit age will be reached by April 2013?” above), or
  • You live in a shared ownership property, or
  • You are in temporary homeless accommodation, or
  • You are in supported accommodation, where the provider of the accommodation is a housing association or a registered charity or a voluntary organisation, and where the provider of the accommodation (or someone on the provider’s behalf) also provides you with care, support or supervision

 

How is the bedroom tax worked out?

Housing benefit is based on an amount of rent that is eligible for housing benefit.  If the house has no extra bedrooms (according to the bedroom allowance) then the full rent is eligible.  From April 2013, if there is at least one extra bedroom, then (unless you are exempt from the bedroom tax) the amount eligible for housing benefit will be reduced as follows:

  • One extra bedroom – 14% reduction (about one seventh)
  • Two or more extra bedrooms – 25% reduction (one quarter)

 

Example

Terry (age 53) and Julie (age 52) live in a housing association house with 3 bedrooms.  They claimed housing benefit 4 years ago, when their 2 children were still at home.  The children have since left home, and the couple are receiving housing benefit to cover their full rent of £60 per week.  In April 2013, when the bedroom tax comes into effect, according to the bedroom allowance they will be allowed only one bedroom, as one bedroom is allowed for a couple.  So they will be considered to have 2 extra bedrooms.  Under the bedroom tax rules their housing benefit will be reduced by 25%, to £45 per week.

What can I do if I am affected by the bedroom tax?

If your housing benefit is reduced by the bedroom tax then, depending on your circumstances, some possible options to consider might be:

  • Apply to the local authority’s Discretionary Housing Payment (DHP) fund for a payment towards the shortfall in housing benefit. There is no automatic entitlement to a DHP. Each case is considered on its merits, at the discretion of the local authority. A DHP form can be requested at the Benefits office of your local authority or you can usually download a DHP form from the authority’s website
  • Move to a house with fewer bedrooms, if available. Your housing association can advise you on this
  • Take in a lodger to fill the extra room you have. You must first check if this is allowed by your landlord. If you do this the lodger would be assessed as part of the household, meaning you would not necessarily be considered to be under-occupying and you may have more income from their rent

The above is not a complete list of all possible options.  For further advice about your situation, please see the section “How can I get further advice?” below.

The benefit cap

From April 2013 there will be a cap (a maximum limit) on the total benefit that can be claimed by people of working age. People who are old enough to qualify for pension credit will not be affected. Certain households will be exempt from the cap (see below) depending on what benefits have been awarded.

Which households will be exempt from the cap?

Just like the bedroom tax (see above) the benefit cap won’t apply to your household if you have (or your partner has) reached pension credit age (see “How can I tell if pension credit age will be reached by April 2013?” above). There will also be exemption where you, your partner or any children you are responsible for, qualify for Working Tax Credit, or have been awarded any of the following benefits:

 

  • Disability Living Allowance (DLA)
  • Personal Independence Payment (from June 2013)
  • Attendance Allowance
  • Employment and Support Allowance (ESA) with a support component
  • Industrial Injuries Benefits
  • War disablement pension or payments under the Armed Forces Compensation Scheme
  • War Widow’s or War Widower’s pension


 

Grace period: It is the government’s intention that, if you have been in employment for 52 weeks or more when you claim benefit and you lost your job through no fault of your own, you may be exempt from the benefit cap for up to 9 months.  This will be called a grace period.

 

Which benefits will count towards the cap?

The following benefits all count when working out if the total amount exceeds the cap:

 

  • Bereavement Allowance
  • Carer’s Allowance
  • Child Benefit
  • Child Tax Credit
  • Employment and Support Allowance except where the Support Component has been awarded
  • Guardian’s Allowance
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Jobseeker’s Allowance Maternity Allowance
  • Severe Disablement Allowance 
  • Widowed Parent’s Allowance
  • Widows Mother’s allowance
  • Widow’s Pension
  • Widow’s Pension (age-related)


 

How much will the benefit cap be?

It is expected that the benefit cap will be:

£500 a week – for a couple (with or without children) or a lone parent

£350 a week – for a single person with no children in the same household

How will the cap be put into effect?

If the total of benefits that count claimed by your household is more than the cap then (unless you are exempt) your housing benefit will be reduced to bring the total benefit down to the amount of the cap.

Example                                

Leone is a lone parent age 42, who lives with her 6 children, all under age 16.  She lives in a 5 bedroom house with a rent of £90.38 per week.  She claims income support.  Assuming that she is not affected by the bedroom tax, Leone’s weekly income from benefits (before the benefit cap is applied) would be as follows:

Income support                                   £71.00

Child benefit                                        £87.30

Child tax credit                                    £319.99

Housing benefit                                   £90.38

Total                                                   £568.67

None of Leone’s benefits comes under an exempt category, and they all count towards the total for the benefit cap.  Her total benefit income estimated above would be £568.67, which is £68.67 more than £500, the benefit cap for a lone parent.  This means, under the benefit cap rules, Leone’s weekly housing benefit would be reduced by £68.67, to £21.71 per week (Please note – the figures above are estimates only, based on benefit rates at time of printing, which may be subject to change).

Possible solutions...

With welfare rights advice, Leone might be able to claim one of the benefits that would make her exempt from the benefit cap. For example, if she started work for at least 16 hours per week, she would qualify for working tax credit and so her household would be exempt from the cap. If Leone or any one of her children became entitled to DLA, then the household would be exempt from the cap. If exemption could not be achieved, Leone could ask to be considered for a discretionary housing payment from the Council to top up her housing benefit.

How can I get advice?

If you are concerned about how the changes might affect you, or if you would like any advice about welfare benefits please see the section on advice contacts here: [link to content not yet supplied]

For advice from the DWP about the benefit cap: Benefit cap helpline: 0845 605 7064

 

Update on Universal Credit

Universal Credit (UC) is a new benefit scheme for working age households, which the UK Government intends to start phasing in from October 2013. UC is meant to replace all income related benefits and tax credits for people of working age. The further intention is that housing benefit for working age people will be replaced by a rent element of universal credit, which would normally be paid monthly and directly to the tenant, with no automatic right to choose payments direct to the landlord instead.

In October this year it was announced that, in Northern Ireland only, where the devolved government has the power to decide welfare policy, people claiming Universal Credit will still have the right to choose that the rent part is paid directly to their landlord, instead of being paid directly to the tenant. In the rest of the UK, the government’s intention is that direct payments to landlord will only be made in exceptional circumstances. The kinds of exceptional circumstances that would qualify for this have yet to be decided.

Please note – the information in the welfare reform pages of our site is believed to be accurate and up to date as far as we know at the time of writing, based on official UK government sources available at that time. However the Government’s plans may change or be subject to unforeseen delay and some of the relevant law may not yet be finalised or may also be subject to change.