10 March 2017
New DWP guidance - Universal Credit benefit cap earnings threshold
In February we published a blog post about new regulations that change the earnings threshold in the benefit cap for Universal Credit claimants.
The benefit cap is a cap on the total amount of benefit that working-age claimants can receive. However, the cap does not currently apply to UC claimants where:
- Net earned income (combined income if part of a couple) in a monthly assessment period is £430 or more, or
- The claimant is within a nine-month grace period. A grace period occurs where the claimants earnings (or combined earnings) from work are less than £430 a month but immediately before this applies their earnings were at least £430 a month for the preceding 12 months. A grace period also occurs where before the current period of entitlement to UC the claimant stopped work and immediately before stopping work their earnings were at least £430 a month for the preceding 12 months.
Following the changes, instead of having a fixed level of net income that exempts a claimant from the cap (currently £430) it will instead be based on the monthly amount a person would earn whilst working 16 hours per week at the National Living Wage (which will be £7.50 an hour from April 2017).
We will update our benefit cap information in the coming weeks ahead of the start of the 2017/18 tax year.
DWP has now published guidance to support this change. The regulations have effect from 1 April 2017. According to the guidance, existing claimants will have the change applied from 1 April 2017 if their assessment period begins on that date. If not, then it will take effect from the first day of the next assessment period that occurs after 1 April 2017.