What are the ‘Bedroom Tax’ and ‘Benefit Cap’?
The Bedroom Tax and Benefit Cap are measures put in place by the Government several years ago to reduce eligibility for support with housing costs for some claimants. Claimants living in properties that the rules say are larger than they need are impacted by the Bedroom Tax, while households where the overall amount of benefits paid are relatively high (£23,000 a year for most households, or £15,410 per year if you are a single adult without children) are impacted by the Benefit Cap.
In one of the more unusual financial impacts of Coronavirus, it appears that a higher than normal number of residents are becoming impacted by these measures for the first time. This article explains why that is, and how you can get help if this applies to you.
Why are more people being impacted by the Bedroom Tax?
The main people impacted by the Bedroom Tax are those making new claims for the first time (or the first time in a while) due to their circumstances being impacted by Coronavirus. Many people in this situation had been paying their rent independently for some time, meaning that rules around benefits did not impact them. However, with so many new people needing to claim, many are finding that the support offered for housing costs is less than expected. The Bedroom Tax is often the cause of this.
Other people might be newly impacted by the Bedroom Tax due to a change in household makeup, such as a grown up child moving out.
Why are more people being impacted by the Benefit Cap?
This is an issue that is far more likely to impact people who already had a claim in place before Coronavirus. As one of the changes made to the benefit system, the Government has actually temporarily increased the amounts paid to people on Universal Credit. This causes a welcome rise in the incomes of many people who need support from the benefit system.
However, because the Benefit Cap has not increased in line with this, some people who currently have a benefit income close to the cap will now be impacted by the cap. This is because the rise in Universal Credit rates will push some people’s income above the cap level.
This creates a “give with one hand and take a way with the other” effect, as increases in income that someone might otherwise get are “cancelled out” by the cap. People impacted by this might not even notice, as their income will not have gone down. It just would not have gone up as much as it should.
People with three or more children, or properties with three or more bedrooms are particularly at risk of being impacted by the Benefit Cap. If you are in this category, it is worth checking your claim to see if the cap is being applied
How we can help
If you think you might be impacted by these changes, help is available. Councils are able to offer a “Discretionary Housing Payment” (DHP) to people who receive support with their housing costs, but where this support doesn’t cover their full rent. An award of a DHP is not guaranteed, and Councils are allowed to refuse requests. However, if you are newly impacted by the Bedroom Tax or Benefit Cap, you should always apply.
You can apply for a DHP yourself via your local council’s website, and this is usually the quickest way to make an application. However, if you are not confident to do this for any reason, you can instead contact Hexagon’s Financial Inclusion team. They can be reached by email at Jherbert@Hexagon.org.uk,or by phone on 0208 768 7925. The team are also happy to help with any other money or benefit related queries that you may have, so please get in touch if you need help with any money related issue.