Important changes to Council Tax and Housing Benefit

Your benefit entitlement may change if;

• you have other adults (non dependants) who live with you
• Increase in ‘non-dependant deductions - If you have other adults living with you (who are not your partner)
• Changes which will affect people who rent their homes from Private Landlords
• Removal of the five bedroom Local Housing Allowance rate
• An end to the maximum £15.00 weekly Housing Benefit excess.
• Extra allowance if you need a carer to live in with you and to look after you.
• Reduction in all Local Housing Allowance (LHA) rates to a lower amount.

We also have a questions and answers fact sheet which you can look at below.We will update this information on a regular basis as we learn more details of the changes.

For existing claimants this change will take affect 9 months after your claim is next reviewed.

If you are an existing claimant, then you will be exempt from this change for up to 9 months from the date your claim is next reviewed. This will allow you time to adjust to any reduction in your Housing Benefit entitlement. For example, if your claim is due to be reviewed in April 2011 any reduction in your Housing Benefit entitlement will not take effect until after January 2012.

If you have a large family and you rent from a private landlord, the most Local Housing Allowance you can get to help with your rent is that for 5 bedrooms.

From next year this will be reduced to the rate for 4 bedrooms.

At the moment the difference between the two rates is £23 per week. If you currently get the 5 bedroom rate your housing benefit will go down by approximately this amount next year when your claim is reviewed.

This change will take affect 9 months from the date your claim is next reviewed.

If you are an existing claimant, then you will be exempt from this change for up to 9 months from the date your claim is next reviewed. This will allow you time to adjust to any reduction in your Housing Benefit entitlement. For example, if your claim is due to be reviewed in April 2011 any reduction in your Housing Benefit entitlement will not take affect until after January 2012.

LHA rates for rooms are based upon the average rent in an area. This is being reduced from the mid point to properties in the bottom third.

For example, in each area, if there were 100 rental properties, the LHA would be based on the 30th lowest rent of those 100 properties. This means generally, that LHA will only fully cover rents of lower priced properties.

Anyone wanting to rent from a higher rented property may have to find the difference. In other words, LHA will only cover the rent of cheaper properties in an area.

The table below show the difference for Birmingham in reducing the LHA rates to the lower 30%. Please note that the rates are based on November 2010, so are indicative only. The table also shows the cut from 5 bedrooms to 4.

Please note that these are estimated figures, and not statements of what the rates will actually be reduced by, when the system changes.

In order to help you further, we have provided a couple of examples to show you how these changes may affect your benefit claim.

Example 1

Mr A currently receives the 3 bedroom rate of £136.63 per week. His benefit is then reviewed on 1 April 2011. Mr A will continue to receive £136.63 Housing Benefit per week until 9 months after the date his claim is reviewed. This means that his benefit entitlement will not reduce to the new rate of £128.58 per week until after 1 January 2012.

Example 2

Mr B is currently receiving the 5 bedroom rate of £207.12 per week. His benefit is then reviewed on 1 April 2011. Mr B will continue to receive £207.12 Housing Benefit per week until 9 months after the date his claim is reviewed. Mr B’s Housing Benefit will then reduce to £161.10 per week after 1 January 2012. This means that his benefit entitlement could reduce by £46.00 per week. The reason for this is because the maximum rate of Housing Benefit is to be limited to the Local Housing Allowance rate for a four bedroom property and the LHA rate is being reduced from the mid point to properties in the bottom third.

Your benefit entitlement may change if you have other adults (apart from your partner) living with you

This change was introduced from 1 April 2011

Deductions can be made from the amount of benefit you get if you share your home with any adults who are not dependant on you – for example, adult children, relatives or friends. These deductions are made because it is assumed that these people should pay something towards your rent, whether they actually do so or not. If you are in this position you may already be aware that these are called non dependant deductions.

Currently, people on local housing allowance/housing benefit lose a proportion of their benefit, ranging from £11.45 a week to £73.85 a week if they have non-dependents living in their home.

For Council Tax Benefit claimants lose a proportion of their benefit ranging from £2.85 a week, up to £9.90 a week.

The amount deducted from the claimant’s benefit entitlement is based on the weekly gross income of the non dependant.

The non dependant deductions have been frozen since 2001 but will now be increased in stages until levels are equal to what they would have been without the freeze.

The following table non dependant charges for 2011/2012 shows the revised deductions and how your benefit could be affected.

If you are affected by this change you will have to ask the other adults in your home to increase the money they give you or you will have to make up the shortfall from your own income.

Universal Credit forms part of the Welfare Reform Bill being introduced by Government. It is intended that this will simplify the benefits system by bringing everything together into a single streamlined payment.

It aims to:

• Simplify the system, making it easier for people to understand
• easier and cheaper for staff to administer
• improve work incentives
• make the move from into and out of work smoother
• reduce in-work poverty
• cut back on fraud and error.

The first applications to Universal Credit will be made in October 2013, and people already receiving benefit will be automatically transferred to Universal Credit between October 2013 and 2017. New claims to Housing Benefit are due to end in April 2014.

Please refer to the Direct Gov website for further details.

From April 2013, there will be a 'cap' (a maximum limit) on the total amount of benefit that people can get.

The actual amount of the cap won’t be fixed until later this year, but we currently expect benefit will be limited to:

A maximum of £500 a week:

• If your household is made up of a couple (with or without children), or
• If you are a lone parent (and the children you have responsibility for live with you).

A maximum of £350 a week:

• If you are a single person and you have no children, or
• The children you have responsibility for don’t live with you.

What affect will this have?

From April 2013, Housing Benefit may go down to make sure that the total amount of your benefit is not more than the cap level. You may have to use money from your other benefits to pay towards the rent for your home if your circumstances do not change before the cap is introduced.

How is it calculated?

All of your benefits will be counted when working out how much you get each week.

Households that aren't affected by the cap

The cap won’t apply to you if you, your partner or any children you are responsible for qualify for Working Tax Credit or have been awarded any of the following benefits:

• Disability Living Allowance
• Industrial Injuries Benefits
• Personal Independence Payment
• Attendance Allowance
• Employment and Support Allowance, if paid with the support component
• War Widow’s or War Widower's Pension

How can I find out more about this?

The Department for Work and Pensions will be writing to all households that may be affected by these changes. For households that receive a letter they have provided a helpline for more information about how this may affect you. The helpline staff will provide general information about the changes and the support you can get but they will not have access to all of your benefit information.

The helpline number is 0845 605 7064 or textphone 0845 608 8551 for people with hearing or speech impairments. The helpline is open from 8am to 6pm and will be available from 9 May 2012.

What can I do to stop the benefit cap applying to me?

Finding work could mean that the cap wouldn't apply to you. Qualifying for Working Tax Credit will mean that you are not affected by these new rules.

A job can also give you the chance to learn new skills, meet new people and boost your confidence. If you’ve been out of work for a while, the thought of getting a job may make you nervous, but there is help and support available for you. By calling the helpline, you may be able to arrange to get this support more quickly.

Where can I find more information?

Lots of information you might need is available online at www.direct.gov.uk/jobseekers where you can get help looking for work, and information on how to update your skills, write a CV, apply for jobs and prepare for an interview.

You can find out more about Working Tax Credit at www.direct.gov.uk/benefits including how many hours you need to work to qualify for Working Tax Credit. You can also find more information online at www.direct.gov.uk/benefitcap