Those claiming Universal Credit and feeling the pinch in January can apply for an advance of up to £812.
It is called a “budget advance” and can be used for emergency household expenses.
However, it is not free money and must be paid back, usually through cuts in future Universal Credit payments.
However, some consider it a safer option than expensive payday loans and other forms of borrowing.
The mirror helped explain how a budgeting advance works, who is eligible, and how to apply.
How much can I borrow through a budgeting advance?
The smallest amount you can get is £100 – the largest is £812 if you have children.
The maximum varies depending on your individual circumstances, you can pay up to:
How much you can get depends on your ability to repay the loan and whether you have savings of over £1,000.
The amount you can borrow decreases by £1 for every £1 you have in savings over the £1,000 threshold.
Am I entitled to a budgeting advance?
You have to meet certain criteria to get a budgeting advance — which means not everyone with Universal Credit is accepted for it.
To be eligible for financial assistance, you must have received one of the following benefits for at least six months:
- universal credit
- Income-related Employment and Support Allowance
- social care
- Income-related unemployment benefit
- State Pension Credit
These criteria do not apply if you need the money to start a new job or keep an existing job.
You must also have earned less than £2,600 (£3,600 combined for couples) in the past six months and have repaid any previous budget advances before you can be accepted for payment.
How do I pay back my budgeting advance?
You must repay your budgeting advance through your future Universal Credit payments — but you won’t be charged interest on the loan.
The first deduction will be made on the day you receive your next payment after you have been accepted for the loan and the full amount must be repaid within 12 months.
If you stop claiming Universal Credit, you still have to pay back your budget advance.
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Payments must be made either from your salary if you are working now or from other benefits you may receive.
If you do not make payment arrangements, the DWP can contact your employer to recover your debt.
The DWP may also use a collection agency to collect outstanding payments – so bear this in mind before requesting a budgeting advance.
How do I request a budget advance?
If you are struggling and need a budget advance, you must apply through your job center work coach.
You should explain how much you can borrow and how much you have to pay back each month.
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