Benefit shortfall
You can be on a benefit shortfall when your eligible benefits are less than their essential living costs, particularly housing costs, or when your payments are reduced due to specific circumstances or rules.
Your common reasons for benefit shortfalls include:
Benefit Cap: A limit is placed on the total amount of benefits a household can receive, which can lead to a reduction in Housing Benefit or the housing element of Universal Credit if the total amount goes over the cap.
Changes in Circumstances: Significant life changes, such as a new job, a new relationship, a child leaving home, or a change in health, may mean a person's benefit entitlement is recalculated and reduced.
Benefit Reductions/Sanctions: Benefits can be cut as a result of:
Recovery of Overpayments: Money is taken from ongoing benefits to pay back previous overpayments.
Sanctions: Failure to engage in required activities (e.g., work preparation) may result in a benefit sanction, reducing the payment.
Non-Dependant Deductions: A reduction in housing benefit if a non-dependant (an adult living in the household) is present.
Housing Cost Gaps:
Local Housing Allowance (LHA) Rates: The amount of rent covered by benefits may be lower than the actual rent charged by a landlord.
Bedroom Tax (Under-occupancy): Benefits may be reduced if a claimant is considered to have more bedrooms than needed for their household size in social housing.
Personal Service Charges: Non-payment of personal charges (e.g., gas, electricity, water) that are not covered by the housing element of benefits can lead to arrears.
Low Initial Entitlement: Many people are on a low income but may not be eligible for certain benefits due to income thresholds or having some savings, resulting in an ongoing struggle to cover costs.
Administrative Issues: Breaks in benefit claims or delays in processing can lead to a lack of income during those periods.
Disability/Illness: While extra benefits exist for disability, planned cuts or changes to these benefits can create significant shortfalls, especially if they make it harder to meet extra costs associated with a health condition.
Lack of National Insurance (NI) Credits: Gaps in NI records (e.g., due to low earnings or being unemployed without claiming benefits) can affect entitlement to the State Pension and other contributory benefits, potentially leading to a shortfall later in life.
People facing shortfalls often have to dedicate significant time and energy to managing their limited budget, which can lead to further problems like rent arrears or taking on debt.
If you are experiencing a benefit shortfall, you can check what benefits you might be entitled to using the GOV.UK benefits and financial support checker or apply for a Discretionary Housing Payment through your local council to help with rent costs.
Get help
If you need advice about your situation, we can help for free.
- Email: info@youthlegal.org.uk
- Phone: 020 3195 1906 (Mon to Fri, 10am to 6pm)
- Contact form: youthlegal.org.uk/contact-us
All our advice is free and confidential.