Published: 17 Nov 2021  |  Category: Welfare benefits  |  Stage: We are writing our application

Supporting refugees affected by the benefit cap

What is the benefit cap and how to manage it

The benefit cap is a limit on the total amount of welfare benefits each family or individual receives. The benefit cap affects Universal Credit as well as Child Benefit (if the family you support still gets legacy benefits you can find list of all affected benefits here).

As of 20 October 2021, the benefit cap is set at following levels:

Outside Greater London

  • £384.62 per week (£20,000 a year) for single parents and couples with or without children (note: the amount is the same regardless of the number of children)
  • £257.69 per week (£13,400 a year) for a single adult

In Greater London

  • £442.31 per week (£23,000 a year) for single parents and couples with or without children (the amount is the same regardless of the number of children)
  • £296.35 per week (£15,410 a year) for a single adult

Who is not affected by the benefit cap?

Not every family will be affected by the benefit cap. There are certain conditions which will mean the family you support will be exempt. Here are some of the conditions that are most likely to apply to refugee families:

  • One of the adults in the household unable to work due to disability or health condition and awarded disability related benefits
  • One of the adults in the household caring for someone with health condition or disability and receiving Carer’s Allowance
  • A child in the household having a health condition or disability and receiving Disability Living Allowance

You can see a full least of conditions excluding families from benefit cap here.

Managing finances when affected by benefit cap

The immediate, short term solution for families affected by the benefit cap is making application to your Local Authority for Discretionary Housing Payment (DHP). Each local authority has a pot of money available to people who cannot afford to pay their rent and this will include those affected by the benefit cap. Discretionary Housing Payment is usually awarded for an initial period of 3 to 6 months and usually will only be extended under certain conditions – for example the family showing that they are looking for work and have a plan for accessing employment. DHP may cover all of the shortfall caused by the benefit cap, or part of it. Often Local Authorities choose to reduce the amount of DHP paid to the family over time.  We recommend putting in a claim for Discretionary Housing Payment as soon as possible.

How to lift the benefit cap?

The benefit cap is lifted when one or more adults in the family jointly earn more than £604 a month on Universal Credit or if one of the adults starts to work and receives working tax credits in the case of legacy benefits.

The benefit cap can be a big challenge especially if your Group operates in an area where housing is expensive, but you can address this. Before the family arrives you can use the benefit calculator to see roughly how much in benefits they will receive and how likely it is that they will be benefit capped. You can also check with your Local Authority the demand on their Discretionary Housing Payments and how likely is it that the family will be able to claim it, for example, in the first year. After the family arrives make sure you explain that their benefits are capped, why that is and what can be done to prevent this. For most, employment is the best way for the benefit cap to be lifted and you may want to include this in your plans and conversations a lot earlier on than you would otherwise.

A note on housing costs

We know that finding housing that is within Local Housing Allowance (LHA) rates, which is what the refugees’ benefits will cover, can be a huge challenge for Groups – particularly in heavily populated areas and where the benefit cap is applied. Not knowing the size of the family or any other details about their needs will present an added challenge, but don’t worry about trying to find a property that caters to every possible family because once your application is approved, the Home Office  will match a family with your Group based on lots of factors, including the size of the property that you have found. 

Wherever possible, it’s advisable for Groups to seek to find housing that is affordable and sustainable within your LHA rates. However, this is not always possible and some Groups ‘top-up’ rent payments through the fundraising that they have made. As part of deciding whether to top up in this way it’s important to consider the ongoing likelihood of the family affording the rent after 2 years, once your support is completed.

Your work as a Community Sponsorship Group is to empower families, so ask yourselves whether it will be realistic for them to earn enough to afford the market rate? Groups have sometimes needed to turn down property due to its cost.

Impact of housing top-ups on benefits

Topping up housing payments in this way should not have an impact on the benefits the family receives, as this would fall under the heading of ‘unearned income’ for the family and falls under UC Regs 66 (1) where, because the income from a top up payment is not listed, it should not be taken into account during an assessment. If you are experiencing different advice to this from the JobCentre, please contact Reset

Further Resources