Benefits are an important source of financial support for many people in the UK. However, your benefits could be cut, sometimes unexpectedly and through no fault of your own.
If this occurs, knowing your options can help you limit the impact and get back on track.
Plot your path towards financial freedom with our Hero’s Journey tool!
MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.
This tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.
Why might my benefits be cut?
Your benefits may be reduced or stopped for one of two reasons: a benefits cap or a benefits sanction. Let’s take a look at what each means and what to do if your benefits are cut because of either.
1. Benefits cap
The benefits cap is basically a limit on the total amount of benefits one can get. It applies to the majority of people aged 16 and up who have not reached the State Pension age.
According to the government, the main aim of the benefits cap is to encourage more people to work while also restoring fairness to the benefits system and reducing government spending.
To find out if you are or will be affected by the benefits cap, you can use this benefits calculator.
How is the benefits cap is applied?
- Your total entitlement to the benefits included in the cap exceeds the Benefit Cap amount, then your benefits will be reduced to bring you within the cap amount.
- You are claiming Housing Benefit, your weekly Housing Benefit will be reduced to the cap amount.
- You are claiming Universal Credit, the amount of Universal Credit that you receive each month will be reduced to the cap amount.
The cap amount varies depending on where you live. It’s usually higher for people who live in London.
More info on the cap amount is available on the gov.uk website.
What can I do if my benefits are cut?
Check your entitlement for other benefits
The benefits cap does not apply to all benefits. So, to make up for the shortfall, you see whether you’re eligible for any other benefits that aren’t affected by the cap.
See if you can become exempt
Some people are exempt from the benefits cap. For example, you’re exempt if you and your partner earn or work enough hours to qualify for the Working Tax Credit. So, by increasing your work hours, you can become exempt and thus prevent your benefits from being capped.
Take care of your rent shortfall
If you find yourself struggling to pay rent due to the benefits cap reducing your Housing Benefit or the housing element of your Universal Credit, you can apply to your council for a Discretionary Housing Payment.
It may also be a good idea to speak to your landlord to see if they can agree to a rent reduction.
Could you be rewarded for your everyday spending?
Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.
2. Benefits sanction
According to the Money Advice service, your benefits might be stopped or reduced if you do not do the things you agreed to do in your claimant commitment (the document you sign when claiming benefits) or if you miss appointments or meetings. This is what is referred to as a benefits sanction.
Benefits that are subject to sanctions include:
- Universal Credit
- Jobseeker’s Allowance
- Income Support
- Employment and Support Allowance
What can I do if my benefits are sanctioned?
If you feel your benefits have been unfairly sanctions, there are things you can do about it.
Check whether the sanction is correct
If you do not believe the sanction is correct or justified, you may file a complaint with the benefits office and request that the decision be reconsidered. This is known as a mandatory consideration.
You can ask for a mandatory consideration by phone or letter. The contact details will be in the decision letter. You can also do it by completing and returning an online form. You only have one month to do this, so you must act quickly.
If the benefits office does not change its decision, you can appeal to a tribunal. However, before filing an appeal against a benefits sanction, consider seeking expert advice first, such as through Citizen Advice.
Apply for a hardship payment from the Jobcentre
If you do not have enough money to live on due to a benefits sanction, you can apply for a hardship payment from the Jobcentre. This normally pays 60% of your usual benefit payment, but you’ll have to pay it back.
Apply to your local welfare scheme
If you are having difficulty with costs such as food or paying your bills, you might also be able to get assistance from your local welfare assistance scheme.
If your benefits are cut, you may feel as if the world is collapsing around you. However, as you can see, there are options for dealing with this issue. Rather than panicking, take stock of the situation and plan your next steps.
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.