Universal Credit cap changes and household limits explained

The DWP has confirmed the household benefit cap is frozen again for 2026-27, with the maximum amount unchanged at up to £25,233 for eligible households in Greater London

The Department for Work and Pensions (DWP) has confirmed the maximum annual benefit payments available to UK households for the new tax year, which commenced in April.

Each year, the DWP establishes the benefits cap in accordance with government policy set by HM Treasury. Unlike the state pension and other benefits such as Universal Credit or Pension Credit, it is not automatically uprated annually.

For the 2026-27 tax year, the benefits cap has once again been held at between £14,753 and £25,233, depending on individual circumstances and location.

The cap was last increased in 2024, was frozen in 2025, and will not be raised in 2026 either.

This week, the cap has come under increased scrutiny following Conservative leader Kemi Badenoch’s pledge to crack down on benefits cap exemptions, such as Personal Independence Payments (PIP), which are not counted towards the cap — nor is the state pension, reports the Express.

Should the Tories return to power, they have stated they would only exempt households from the cap if all adults capable of working are in employment. Receiving benefits such as PIP would no longer serve as an automatic exemption, a move they claim would “stop those who abuse the system getting almost unlimited welfare payments”.

The cap is applied at varying rates for single people and couples, and differs between London and the rest of the country. Currently, the cap stands at £22,020 for couples and lone parents outside London, or £14,753 for single adults without children.

In Greater London, the cap is £25,233 for couples and single parents, and £16,967 for single adults.

While members of a household may qualify for various combinations of benefits, including Universal Credit, Housing Benefit and Child Benefit, the total amount received cannot surpass the Benefit Cap.

This means those who reach the cap will have one of their benefits, most commonly Universal Credit, reduced to ensure the total remains within the limit.

Official figures published by the Department for Work and Pensions reveal that a total of 119,000 households have had their benefits capped up until August 2025.

According to newly released DWP data, UK households are losing an average of £249 per month (equating to £2,988 annually) as a result of the Benefits Cap.

The Benefits Cap represents the maximum total amount a single household can receive in benefits, once all claims made by household members are combined.

Citizens Advice also outlines how the system operates, noting that certain exemptions allow households to exceed the cap.

It says: “The Benefit Cap is a limit to the total amount of money you can get from some benefits. If your Universal Credit payment is over a specific amount, the DWP might reduce it to bring it down to a certain level.

“The Benefit Cap will not apply if you’re working and earn at least £846 a month after tax. If you have a partner, your combined earnings need to be at least £846 a month.”

DWP benefits given Benefits Cap exemption

DWP guidance stipulates that state pensioners are exempt from the cap upon reaching state pension age. It further clarifies that the benefit cap does not apply to these benefits:

You’re not affected by the cap if you or your partner:

• Get Universal Credit because of a disability or health condition that stops you from working (this is called ‘limited capability for work and work-related activity’)
• Get Universal Credit because you care for someone with a disability
• Get Universal Credit and you and your partner earn £881 or more a month combined, after tax and National Insurance contributions

You’re also not affected by the cap if you, your partner or any children under 18 living with you gets:

• Adult Disability Payment (ADP)
• Armed Forces Compensation Scheme
• Armed Forces Independence Payment
• Attendance Allowance
• Carer’s Allowance
• Carer Support Payment
• Child Disability Payment
• Disability Living Allowance (DLA)
• Employment and Support Allowance (if you get the support component)
• Guardian’s Allowance
• Industrial Injuries Benefits (and equivalent payments as part of a War Disablement Pension or the Armed Forces Compensation Scheme)
• Pension Age Disability Payment
• Personal Independence Payment (PIP)
• Scottish Adult Disability Living Allowance (SADLA)
• War pensions
• War Widow’s or War Widower’s Pension

This final category is precisely what the Conservatives have indicated they would target for reductions.

Recently, the government abolished the two-child benefit cap from April. This had previously placed a limit on claiming additional Universal Credit payments for more than two children. As a result, families will now be entitled to claim further funds for each additional child under the ‘children’ element of Universal Credit.

However, in a somewhat confusing twist, this remains subject to the overall Benefits Cap, meaning households will not receive any additional funds if doing so would exceed the cap.

As explained by Money Helper: “The benefit cap is the maximum amount your household can get in benefits. This means that if you already get the maximum amount your payment will not increase.”