Benefit cap earnings threshold rises to £793 a month

The earnings threshold used in the benefit cap grace period rose from £722 to £793 a month from 8 April 2024, according to Shelter Cymru¹. The figure is the amount a claimant must earn after tax and National Insurance contributions for the cap not to apply while claiming Universal Credit¹.

The benefit cap limits the total amount of benefits many working age people can be paid. In Wales the cap is £423.46 per week for single parents and couples with children, given as £1,835 a month, and £283.71 per week for single people, given as £1,229.42 a month¹. Where the total of benefits received is above these limits, Housing Benefit or Universal Credit is reduced to bring the total down to the cap, and Shelter Cymru says this happens automatically¹. The cap applies only to people of working age¹.

The grace period is separate from the exemption for people who are in work. The cap does not apply where a claimant or their partner is working, claims Universal Credit and earns at least £793 a month after tax and National Insurance contributions¹. A nine month grace period applies where a claimant or their partner has been in work continuously for 12 months, employed or self-employed, and loses that work through no fault of their own¹. For the grace period to apply, the claimant must now be earning less than £793 a month, and 12 months before they stopped working or their earnings fell, they must have earned the same as or more than the earnings threshold. Shelter Cymru states that this threshold was £722 up to 7 April 2024 and is £793 from 8 April 2024¹.

The cap calculation adds together the amounts received by the claimant, their partner and any children living with them from a list of benefits that includes Housing Benefit unless the claimant lives in supported housing, Income Support, Jobseeker's Allowance, Employment and Support Allowance unless the claimant is in the support group, Child Benefit, Child Tax Credits, Maternity Allowance, Widows Parent's Allowance, Severe Disablement Allowance, Bereavement Allowance, Incapacity Benefit and Universal Credit except in certain circumstances¹. One-off payments such as budgeting loans are not taken into account¹.

The cap does not apply in a number of other situations, including where the claimant or their partner is of pension age, receives Working Tax Credit or works enough hours to claim it, receives certain disability benefits such as Disability Living Allowance, Personal Independence Payment, Attendance Allowance, the Employment and Support Allowance support component, the Universal Credit carer element or limited capability for work-related activity element, Carer's Allowance or Guardian's Allowance, War Widow's or War Widower's pensions, Industrial Injuries Benefits and equivalent payments, or any payment from the Armed Forces Compensation Scheme or an Armed Forces Independence Payment¹.

Why it matters for households

The change affects working age households whose benefits are capped and who are trying to establish or keep the grace period, or to move above the earnings threshold so the cap does not apply at all. Because the threshold is now £793 a month rather than £722, a household whose earnings were between those two figures would not have met the old threshold but meets the new one from 8 April 2024¹. For the grace period, the test looks back 12 months, so the threshold in force at the earlier point matters as well as the current figure¹.

Where the cap applies, the reduction is made automatically to Housing Benefit or Universal Credit¹. Shelter Cymru notes that a reduced income can leave a household unable to pay all its rent, with the risk of arrears and of losing the home, and that a local council may be able to help with rent through a discretionary housing payment in cases of exceptional hardship, usually for a short time only¹.

What happens next

Shelter Cymru directs claimants who receive Universal Credit to ask for help from the Department for Work and Pensions through their online journal, and those receiving other benefits to contact the DWP on 0800 169 0145, or 0800 169 0238 for Welsh language¹. It also points to the government's online benefit cap calculator for an estimate of how much benefit might be reduced¹. No further changes to the threshold have been reported.