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How is Benefit Calculated?

Use the links below to jump to the section you wish to view, or scroll down the page to read the sections in order.

How is Benefit entitlement calculated
Tenants with Private Landlords
Local Housing Allowance from 7 April 2008
Thinking of Moving?
Income
Savings and Investments
The size of your family
Non-dependants

If you wish, you can use our online Benefit Calculator to estimate how much benefit you could receive.

How is Benefit entitlement calculated?

Your benefit is worked out according to Government rules based on the amount of eligible rent and/or Council Tax you pay, your income, savings and personal circumstances.

The amount of benefit we will award you depends upon five things. 

1. You and your partner's income
2. Any savings or investments that you have
3. The size of your family
4. The amount of Council Tax or rent you have to pay
5. Any non-dependants who live with you.

If you pay your rent to a Private landlord, your Housing Benefit may be restricted to an eligible rent as determined by the Rent Service and further rules apply to single customers under the age of 25.  

If you claim Housing Benefit on or after 7 April 2008 your Housing Benefit will be based on a Local Housing Allowance.

Tenants with Private Landlords

If you pay your rent to a private landlord (not the Council or a Housing Association) and apply for Housing Benefit on or after 7 April 2008, your Housing Benefit will be calculated based on a Local Housing Allowance (LHA).

Existing claims prior to 7 April 2008 

If you are already in receipt of Housing Benefit prior to 7 April 2008, in privately rented accommodation, you will not be affected by Local Housing Allowance rules unless:-

• you change your address to a privately rented property or
• have a break in your claim of one week or more.

Your Housing Benefit entitlement will continue to be calculated based on an eligible rent for Housing Benefit purposes as determined by the Rent Service.

The Rent Service is an Independent Executive Agency and they carry out rental valuations for Housing Benefit purposes and some prospective customers. 

The eligible rent determined by the Rent Service may be lower than your actual rent. This may be because your rent is higher than average for suitable accommodation in this area or you are living in a property which is larger than you need.

The eligible rent figure determined by the Rent Service will be based on your family circumstances and the average prices of suitable accommodation in this area. 

Special rules apply to single customers under the age of 25 and normally in these cases the eligible rent will be based on an average single room rent with shared facilities.

Local Housing Allowance from 7 April 2008

Local Housing Allowance (LHA) is a new scheme for calculating Housing Benefit for people living in the private rental sector.  Housing Benefit entitlement will be calculated based on a LHA rate which is determined by the number of people in your household and the area you live in.

LHA is a maximum flat rate allowance decided by the Rent Service based on a broad geographical area across the Country.  The Country is divided into areas for LHA purposes called Broad Rental Market Area (BRMA).

There are two BRMA rates of LHA for people residing in Oswestry Borough.  Most properties are included in Salop BRMA LHA; however there are a small number of properties in the north of the Oswestry Borough area which are covered by Wrexham BRMA LHA rates.

Please check this map to find out which BRMA LHA rates apply to you.  Any areas, e.g. Chirk Bank, which are between the blue and red boundary lines are included in the Wrexham BRMA. 

Local Housing Allowance Room/Bedroom Requirements

The LHA rate that will apply to you will depend on the number of bedrooms you require.  There are special rules for single people under 25 and single people/couples who rent a room with shared facilities. 

To calculate the number of bedrooms needed, you need to count 1 bedroom for the following people living in your household:-

• a single claimant or every adult couple (married or unmarried)
• any other single adult aged 16 or over
• any two children of the same sex aged up to 15
• any two children under the age of 10
• any other child

You cannot include foster children, children whom you do not receive child benefit for, students who live away from home and return during holidays or students who are placed to live with you for less than a year when calculating your room requirements. 

Are you aged under 25, or living in shared accomodation?

If you are single, under 25 and don't have any children, then you will only be entitled to the LHA rate for a room in shared accomodation.  However, there are exceptions to this rule if you are entitled to a severe disability premium in your Benefit assessment or if you are aged under 22 and have left care.  Please contact this office on 01691 677330 for further information.

If you are single, or a couple not responsible for children, aged over 25 and you are living in shared accomodation.  Then you will only be entitled to the shared room rate of Local Housing Allowance.

Local Housing Allowance Rates

After you have calculated your room/bedroom requirements, please see the LHA rates to check the maximum LHA you may be entitled to receive.  Depending on you and your partner's income/capital you may be entitled to less than the maximum rate.

Please see LHA rates to check the LHA rate you will be entitled to.

For further information regarding LHA rates and an online bedroom calculator please see the LHA Direct website

What happens if my rent is different to the LHA for my circumstances?

Rent Lower than LHA

If your rent is lower than the LHA for the type of property you need, your Housing Benefit entitlement will be calculated based on your rent liability plus a maximum of £15 up to the level of the appropriate LHA rate. 
 
Examples:
If your weekly rent is £80 and your LHA rate is £90, your Housing Benefit entitlement will be calculated based on an eligible rent of £90 per week.  If you are entitled to maximum Housing Benefit you will receive £90 per week.

If your weekly rent is £70 and your LHA rate is £90, Your Housing Benefit entitlement will be calculated based on an eligible rent of £85 per week (£70 + £15).  If you are entitled to maximum Housing Benefit you will receive £85 per week.

Rent higher than LHA

If your rent is higher than the LHA for the type of property you need, your Housing Benefit entitlement will be calculated based on the LHA rate for your circumstances.  This means you will have to pay the difference to your landlord.

If you make a new application for Housing Benefit, could previously afford your rent when you moved in and have not received Housing Benefit in the last 52 weeks, you may be protected from the LHA scheme for the first 13 weeks of your claim. This is to allow you to seek suitable alternative accommodation if you wish, should the LHA rate be lower than the rent you are liable to pay.

Who will not be affected by LHA?

You will not be affected by LHA if:-

• Your tenancy started before 15 January 1989
• You rent form the Council or a Housing Association
• Your rent includes a substantial amount of board, for example Bed & Breakfast
• You live in a hostel, houseboat, mobile home or caravan

If you fall into one of the last two categories, your rent will be referred to the Rent Service who will continue to determine an eligible rent for Housing Benefit purposes in these cases.

Payment of Local Housing Allowance

Normally LHA will be paid to the tenant.  This will be paid by BACS in to your bank account.  There are certain circumstances that we are able to pay the landlord, this is known as 'safeguarding'.

For further information regarding safeguarding please see the Safeguard Procedure

If you think we should pay your landlord under the Safeguard Procedure, then you should contact us about it.

Bank accounts

As Local Housing Allowance is normally paid to the tenant then you are going to need a bank account.  If you do not have a bank account, you will need to go to a high street bank and open a basic bank account.

You can also open a bank account with Just Credit Union.  Please see the Just Credit Union website for further information about the services they provide.

There is a charge for operating Just Credit Union accounts, however, Oswestry Borough Council has arranged for funding to pay these charges, for customers who open a Just Credit Union account to receive Housing Benefit payments.  Please contact the Council on 01691 677330 if you would like to open a Just Credit account and we will refer your details to Just Credit Union.

Financial Advice

If you would like any assistance with budgeting your finances or advice regarding debts, please contact the Housing Benefit department who can make a referral for you to the Citizens Advice Bureau for specialist advice.

Thinking of moving?

You can find out in advance of moving into a property, the maximum amount of LHA you can receive.  You can calculate the rooms you require and check the LHA rate or contact us on 01691 677330.

Please see the LHA Rates to check the LHA rate you will be entitled to.

If you are thinking of renting a caravan, houseboat or accomodation that includes meals, you are advised to apply for a Pre Tenancy Determination.

Pre - Tenancy Determinations

If you are thinking of moving to a new property and will be making an application for Housing Benefit, you are strongly advised to request a Pre - Tenancy Determination.

A Pre - Tenancy Determination will tell you the maximum rent which will be used to calculate your Housing Benefit entitlement. It does not tell you how much Housing Benefit you will get - this will depend on your circumstances e.g. your income and size of your family.

The Rent Service will send you a copy of their decision and the information they provide will help you decide whether you can afford the rent for the property.

If you are in receipt of Income Support, Income Based Job seeker's Allowance or Guarantee Credit for pensioners, you will be entitled to maximum Benefit.  However, this may be reduced if there are non-dependants living in the household.

We treat couples jointly, we compare combined income and capital with joint needs.

Income

You must tell us about all the income you and your family receives. 

If you are working, we will deduct National Insurance contributions, Income Tax and half of any pension contributions that you pay, to calculate your net earnings.

Some income may be disregarded when calculating Benefit entitlement.  For example Attendance Allowance and Disability Living Allowance are fully disregarded.  Other examples of income disregards are earnings of £5.00 for a single person, earnings of £10.00 per week for each couple and earnings of £25.00 per week for a lone parent.

Savings and Investments

You must provide confirmation of all the capital you own.  Capital can be money you have in a bank/building society account, shares, savings bonds, property (excluding the property you live in as your home), investments etc.

All your savings and investments are counted as capital when assessing your benefit entitlement.

If you are under 60 years of age the first £3,000 of your capital will be disregarded.  For each £250.00 or part of, above this figure, we must add £1.00 to your weekly income. 
If you are over 60 years of age the first £6,000 of your capital will be disregarded. For each £500.00 or part of, above this figure, we must add £1.00 to your weekly income.

This is called tariff income.

If you own capital of more than £16,000, you will not be entitled to Housing/Council Tax Benefit, unless you receive Guarantee Credit for pensioners.  You may, however,  be entitled to Second Adult Rebate.  Click here for further information.

The size of your family

We use applicable amounts and premiums to work out your entitlement to benefit, these are laid down by the Government.  Your applicable amount is made up of three parts - personal allowances, dependants allowances and premiums for certain categories of people.

Your net income is then compared to your applicable amount to calculate your Housing and Council Tax Benefit.

Non-dependants

A non-dependant is someone aged 18 years or over who lives with you but does not pay any rent.  This means for example an adult son, daughter or elderly relative.  For most non-dependants living in your home we will reduce your Housing and Council Tax benefit by a certain amount for each non dependant depending on their income.  This is known as a 'non-dependant deduction'.

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