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Welfare reform – how will it affect you?

Starting in April 2013, three major changes will be made to the jobs_recruitment_710x300benefit system, the benefit cap, the “Bedroom tax” and the abolition of Council Tax Benefit. These changes may mean that you receive less in benefits. If you are affected by the benefit changes, don’t panic, find out about more about your options and plan ahead so you can pay your bills and rent.

Why are these changes taking place?
The coalition government wants to make changes that will make the welfare benefit system fairer, simpler, and more affordable.

The changes are designed to make sure that families getting benefits will not get more than the average working family. It is also hoped that changes will save money and help cut the country’s budget deficit.

What age group will be affected?
The changes below will only affect you if you receive benefits and are of working age (under 61 years old). Please read all the below information to find out if they will affect you

What is the “bedroom tax”?

Also known as the under-occupancy rule, the “bedroom tax” means that from April 2013, you may get less Housing Benefit if you have a ‘spare’ room, as decided by government set standards.

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Under new government rules, if you have one spare room your housing benefit will be cut by 14% of the rent you pay each week.

e.g. If you get £100 to pay your rent of £100 each week, your housing benefit will be cut by £14 to £86. This means there will be a difference of £14 between the rent you will have to pay and housing benefit you receive.

If you have two or more spare rooms your housing benefit will be cut by 25% of the rent you pay each week.

Somebody sleeps in every bedroom of my home- so that means I don’t have a spare room, right?

Wrong. Under the new benefit rules, the following is allowed without you being affected by cuts:

  • 1 bedroom for a couple
  • 1 bedroom for a person aged 16 years or over
  • 1 bedroom for 2 children aged under 16 of the same gender
  • 1 bedroom for 2 children aged under 10 years (a child under 10 is expected to share with another a child 9 years or under, boy or girl).
  • 1 extra bedroom is allowed if you or your partner needs a regular overnight carer
  • No extra bedroom is allowed for children visiting at weekend, foster children, couples who use separate bedrooms because of illness, disabled adults
  • 1 extra bedroom may be allowed for a severely disabled child

What does the Benefit Cap mean?
From April 2013, the total benefits you can receive will be limited (capped) to £500 per week (£26,000 per year) for families, and £350 per week for single people without children.

Work out how much you receive in benefits each week to check if your benefits are above the cap.

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Will the benefit cap apply to everyone?

No. You may be exempt (not affected) if:

  • You or your partner/child receives Disability Living Allowance (DLA)/ Personal Independence Payment (PIP)/ Attendance Allowance
  • You or your partner receives Working Tax Credit
  • You or your partner receives War Widows/Widowers Pension
  • You or your partner receive Employment & Support Allowance with Support Component

Have you had a letter from the Department of Work & Pensions?

The Department of Work and Pension (DWP) should have contacted you if you will be affected by the benefit cap.

No- I haven’t received a letter…
You may not be affected immediately

Yes- I have received a letter…
Is this information about your household correct? Do you fall into one of the above exempt groups? If you think the DWP are wrong, you need to contact them.

If you have received a letter you should call the Department of Work and Pesnions (DWP) on 0845 605 7064

How much will be deducted if I receive more than the cap?
Go onto the government’s benefit cap calculator to get an estimate of how much your Housing Benefit could be reduced by if you exceed the level of the benefit cap.

If I work does it mean my benefits won’t be capped?

Households who are working enough hours to qualify for Working Tax Credit will be exempt from the cap. This is…

  • 16 hours for lone parents
  • 24 hours for couples
  • 30 hours for single individuals over 25 years old.
  • Households who are enititled to Working Tax Credit will be exempt even if they don’t claim it.

Changes to Council Tax
Council Tax Benefit is being abolished (stopped) from April 2013 and being replaced by local Council Tax Support Schemes.

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Why is this happening?
Local councils have been told by the government to come up with their own scheme to help low income households, whose council tax used to be paid by the benefit. But the Government is giving councils 10% less money to pay for this than before, so local councils have to decide how to save money.

What does this mean for you?
If you received Council Tax Benefit before April, if you are of working age it is very likely you will have to pay some of your Council Tax from April 2013- even if you got full Council Tax Benefit before.

If you got partial Council Tax Benefit, you may have to pay more Council Tax after April.

You won’t be affected if you are a pensioner.

The new rules for what is called ‘Council Tax Support’ are different from borough to borough. If you haven’t been told what your council has planned for Council Tax Support, please do call your council now.

You should be able to get information about this by calling your local housing benefit office or from the council’s website.

This is important. If you are going to have to pay some of the tax you are going to have to think where to find the extra money.

What is Universal Credit?

Universal Credit is a monthly payment that combines nearly all available benefits, and will be paid directly to one person in the household. The benefits it will include are income-related jobseekers allowance, housing benefit, child tax credit, working tax credit, income support and income-related employment support allowance.

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Will this affect the payment of my rent?
Yes, as your housing benefit will most likely be paid directly to you, and you will be responsible for paying your rent on time to your landlord.

When will Universal credit be introduced?
From October 2013 for new benefit claimants, and sometime from mid-2014 if you already receive benefits

Non-dependents deductions

A non-dependent is a person who is over 18 years old, is not dependent on you for financial support and lives with you in your home. This could be a grown-up son or daughter or an elderly relative.

Non-dependents do not include a partner, joint tenant, registered carers, and foster children.

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What are non-dependents deductions?
If you have a non-dependent living with you, you could have your Housing Benefit or Council Tax Benefit reduced.

How much is the deduction?
At the moment, the deduction depends on the circumstances of the non-dependent such as, whether they claim benefits, whether they work more than 16 hours a week and what their income is (before tax and National Insurance).

What can I do if I have a non-dependent living with me?
It is your responsibility to make sure the rent is paid if you are the tenant. The non-dependent living with you should make up the shortfall in your Housing Benefit or Council Tax, but it is up to you to make sure this happens.

I am going to be affected- what do I do?
If your income is going to be affected by the Benefit Cap or the Bedroom Tax you are going to have to make up the shortfall (the shortfall is the difference between the amount you received before and what you will receive after the changes) in Housing Benefit or moving.

There are several options available to avoid feeling negative effects from the welfare changes, but if you don’t plan ahead you could get yourself into debt.

Maximise your income…

Are you getting the right benefits?
We have a benefits and money advice service to help you access the benefits you are entitled to.

You may be able to apply for…

  • Discretionary Housing Payment where you can show exceptional need. DHP can help cover the shortfall in your Housing Benefit. You will need to contact Cheltenham Borough Council for an application form. Disabled people living in adapted homes, and foster carers are more likely to receive the payment. Payments will only be for a limited period.
  • Disability Living Allowance if you have difficulty walking or need help looking after yourself. Households where claimants and/or their children get Disability Living Allowance or Attendance Allowance are exempt from the benefit cap. Please be aware: From October 2013, in London and the South East, a new benefit called Personal Independence Payment will replace DLA for disabled people aged 16 to 64.
  • Working Tax Credit if you/your partner are working and on a low income. Claiming Working Tax Credit exempts you from the benefit cap.

Could you manage your money better?
Better budgeting could mean that your money could stretch further to cover the shortfall in Housing Benefit. We offer training and advice to help you make the most of your money.

We have a Benefit and Money Adviser who is here to help you with benefit and debt advice. Contact him on 01242 775283

Do you need help getting into work?
Getting a job or working more hours is a way to increase your income and cover any shortfall in housing benefit. We have a dedicated employment initiates team who can be contacted on 01242 774601.

Could you rent out your ‘spare’ room?
You could increase your income by taking in a lodger who will pay you rent. Remember you will need our permission first. The first £20 of any income from a lodger is not taken into account when calculating your Housing Benefit, but any extra income is deducted from your HB entitlement. More information is available on the Department for Work and Pension’s factsheet

Consider a move

If you decide you want to stay in your current home you will need to find a way to pay the shortfall in Housing Benefit. If you get into rent arrears your home may be at risk.

Moving to a smaller property will mean that you pay less rent.

If you decide you want to move to a smaller home, we can give you detailed advice on a variety of options. We will give you priority for a transfer but it may take some time for you to move. The most realistic option is to find a swap.

Useful contacts

Some useful contact numbers and websites:

Citizen’s Advice Bureau 08444 111 444 or visit to find a local bureau.

Step Change (CCCS) 0800 138 1111

National Debt Line 0808 808 4000

Money Advice Service 0300 500 5000

Direct Gov – DWP information on benefits

Money Saving Expert – Budgeting Hints and Tips

Turn2Us – information on benefits and grants



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