Benefit changes from April 2016

Here is our quick guide to some of the benefit changes coming into effect from April 2016 and how you may be affected.

Limit on benefits                                          

The benefit cap will be reduced for families and single people from April 2016.

 Claimant type  Current benefit cap  New benefit cap from 2016
Single person in London £18,200 per year or £350 per week £15,410 per year or £296 per week
Single person outside of London £18,200 per year or £350 per week £13,400 per year or £258 per week
Couples, families or single parents in London £26,000 per year or £500 per week £23,000 per year or £442 per week
Couples, families or single parents outside of London £26,000 per week or £500 per week £20,000 per year or £385 per week

Pay to Stay

The government is still reviewing this part of the welfare and housing bill but have agreed a voluntary deal for housing associations.

Tenants earning more than £40,000 in London and £30,000 outside of London will be expected to pay a market or close to a market rent. The policy is likely to go ahead but the final figures are subject to change.

Backdating Housing Benefit

Housing Benefit claims will only be backdated for up to four weeks. Previously it could have been backdated for six months.

Benefit and tax credit rates

These will be frozen for four years and not increased for working-age benefits. However, the freeze excludes people on disability, pensioner and statutory benefits.

Removal of family premium in Housing Benefit

The family premium makes up part of the Housing Benefit award and is paid to couples and lone parents with dependent children. It is worth £17.45pw and will be removed from new claimants from April 2016.

Universal Credit

The work allowance in Universal Credit (the amount you can earn without your benefit being affected) will be reduced.

For disabled people and people with children who have housing costs it will be reduced to £192 per month, and for those without housing costs it will be cut to £397 per month.

The work allowance will also be abolished altogether for non-disabled claimants without children, which means their benefit will be reduced as soon as they start to earn.

Minimum wage

The national minimum wage will be called national living wage. It will increase to £7.20 per hour for those aged over 25 and will rise to £9 per hour by 2020.

Personal tax allowance

This is the amount you can earn before you start paying income tax. It will increase from £10,600 to £11,000. By 2020 it will rise to £12,500.

Those going abroad

Housing Benefit and Pension Credit payments will now be limited to four weeks for claimants who go outside of the UK. This will make sure that the benefits system is not paying the rent of people who go abroad for more than four weeks at a time.

Reduction in social rents

In the July 2015 budget, the government announced that there will be a 1% reduction of social rents each year for the next four years from April 2016 through to 2020.

A third of households who live in social housing (homes owned by a council or housing association) and who pay their own rent, will see a £1.20 reduction off their average weekly rent. The remaining two thirds of tenants who claim housing benefit to cover their rent will experience no impact or change.

Local Housing Allowance rates

In its 2015 Spending Review the government announced that it will introduce a cap on the amount of rent Housing Benefit will cover in the social rented sector. This will be capped to the relevant Local Housing Allowance for new tenancies signed on or after 1 April 2016 with Housing Benefit entitlement changing from April 2018. This includes the shared accommodation rate for single people aged under 35 years.

If you are having problems paying your rent or are in financial difficulty please contact our income team.