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Universal Credit (UC) is gradually replacing tax credits, and some other social security benefits. Universal credit is now available across the UK and HMRC state that it is no longer possible for anyone to make a brand-new claim for tax credits. The only exception is for certain people who are granted refugee status. Instead, people are expected to claim UC or pension credit depending on their circumstances.  Currently, existing tax credit claimants can continue to renew their tax credits and/or add extra elements to their claim. See our existing tax credit claimants page for more information. Our understanding is that the majority of existing tax credit claimants will move to either universal credit or pension credit by the end of the 2024/25 tax year. You can find out more about this in our universal credit section. 

Updated on 6 April 2024

Benefit cap

The benefit cap is a limit on the total amount of working age benefits that you can receive. If your universal credit is over the amount of your benefit cap, it might be reduced.

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The benefit cap applies to all new universal credit claims. There is a benefits cap calculator available on the GOV.UK website.

In Northern Ireland, welfare supplementary payments can be made in certain situations if you are affected by the benefit cap

Benefit cap rates

The amount of the benefit cap depends on whether you live inside or outside Greater London, are single or part of a couple or have children living with you.

The rates are available on the GOV.UK website.

The benefits that count towards the cap

The benefits currently taken into account are:

  • Bereavement Allowance;
  • Child Benefit;
  • Child Tax Credit;
  • Employment and Support Allowance (unless you get the support component);
  • Housing Benefit;
  • Incapacity Benefit;
  • Income Support;
  • Jobseeker’s Allowance;
  • Maternity Allowance;
  • Severe Disablement Allowance;
  • Universal Credit; and
  • Widowed Parent’s Allowance (including widowed mother’s allowance and widow’s pension).

Some people are excluded from having the cap applied to them – see GOV.UK for a full list of situations where the cap does not apply.

The benefit cap and universal credit

The benefit cap is relevant to the final stage of calculating a universal credit award. Firstly, the amount of excess must be calculated.

This is the amount that the universal credit award, plus any of the other benefits listed above, exceeds the benefit cap and minus any amount included in the award for childcare costs. This is so that the childcare element protected from the cap.

No benefit cap reduction will be applied to your award if it is just your childcare costs element that exceed the excess amount.

There are some other exceptions to the cap. The cap does not apply where you or your partner:

  • Have net earned income (combined income if you have a joint claim) in a monthly assessment period is above a certain level (roughly the equivalent net earnings from 16 hours per week paid at the national living wage rate). If you have a partner, your combined earnings need to be at least this amount.
  • Are getting the Limited Capability for Work Related Activity (LCWRA) element of universal credit
  • Are getting the carer element of universal credit or carer’s allowance
  • Are getting certain benefits because you are disabled or have a child who gets certain disability benefits. The full list of benefits is available on GOV.UK.
  • You are within a nine-month grace period. A grace period occurs where your earnings (or combined earnings if you have a joint claim) from work are less than the relevant threshold but immediately before this applies your earnings were at least the relevant threshold for the preceding 12 months. A grace period also occurs where before the current period of entitlement to universal credit you stopped work and immediately before stopping work your earnings were at or above the relevant threshold every month for the preceding 12 months.

The cap does not apply if you have reached state pension age. If you’re part of a couple and one of you is under state pension age, the cap may apply. 

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