Housing Benefit - Housing Benefit Taper

Housing Benefit Taper

The income of the claimant is compared to the "applicable amount". This is an assessment of the minimum level of income a claimant and household need to live on. This is broadly similar to the amount that such a person would be paid as Income Support / Job Seekers Allowance. If a claimant is receiving a "Passported Benefit" income support, income-based Jobseeker's Allowance, or Pension Credit Guarantee or if the income is no higher than the applicable amount, the claimant's housing benefit will normally be the full eligible rent. This is the maximum housing benefit possible. However, deductions can be made where there are non-dependants living in the household (except where the claimant is blind or in receipt of the higher rate of the Care component of Disability Living Allowance).

If a claimant's income is higher than applicable amount then a deduction is made from the maximum housing benefit entitlement based on how high the eligible income is. Housing benefit is reduced at a rate of 65p for each £1 of excess income. (For Council Tax benefit the amount is reduced by 20p for each £1). The calculated income will also include an assumed rate of income generated from any savings held by the claimant.

For example, assume that the maximum permitted housing benefit that could be paid for an individual who attracted the full rate of benefit were £100. Assume further that this claimant is not entitled to the full amount because his income exceeds the applicable amount by £60; that is, he has excess income of £60. The maximum possible benefit will be reduced by 65% of £60 to a value of £100 - (65% X £60) = £100 - £39 = £61; his award of housing benefit using the current taper is thus £61 instead of the maximum possible amount of £100.

Actual rates of interest are ignored when calculating income from Capital. When calculating income from capital the first £6000 of savings are disregarded. The Council may still require proof of any savings that are held below this amount. Undeclared savings and income are often picked up through data matching. This matching process is compulsory for all Local Authorities. Not declaring savings or income is likely to lead to the claimant being prosecuted for fraud. Since 2009, if there is more than £10000 in savings each £500 of savings (or part thereof) results in an extra £1 a week in income being assumed in the calculation of income. This is termed notional income, but in any case housing benefits cannot be paid if the total savings reach £16000. (See below)

Claimants are automatically excluded from benefit with more than £16,000 of capital (unless qualifying for Pension Credit Guarantee). Certain types of capital, such as personal injury compensation payments and the value of capital that is no longer available to the claimant are disregarded.

This deduction is known as the taper, and in this way, housing benefit is means tested.