DWP Universal Credit £812 Budgeting Advance loan doesn't have to be repaid for years

People on Universal Credit can get loans to help with emergency costs

The Department for Work and Pensions (DWP) is making huge changes to its loan scheme and it means benefit claimants have longer to make repayments.

Budgeting Advances are aimed at helping with unexpected expenses, such as replacing vital home appliances. From December 2024, those taking out a Budgeting Advance loan will have their repayment period doubled from the usual 12 months to 24 months, which means claimants will face lower monthly repayments. The loans, capped at £812, come without any interest charges.

During his Spring Statement and Budget speech on March 6 in the Commons, Chancellor Jeremy Hunt underscored the significance of these loans, saying: “Nearly one million households on Universal Credit take out Budgeting Advance loans to pay for more expensive emergencies like boiler repairs or help getting a job.”

He went on to say: “To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months.”

Budgeting Loans are designed to assist with a range of expenses, including the costs of furniture or household items like washing machines, clothes, shoes, advance rent payments, relocation expenses, home maintenance and improvements, security measures, UK travel, work-related costs, maternity needs, and funeral expenses, as reported by Birmingham Live.

The costs of repaying hire purchase loans and loans taken out for the aforementioned items can also be assisted with. If you choose a budgeting advance, your Universal Credit payments will be reduced until the borrowed amount is fully repaid, currently over a 12-month period.

Your work coach will help determine the sum you receive based on your needs. The DWP clarified: “A Budgeting Loan is interest-free, so you only pay back what you borrow. The repayments will be taken automatically from your benefits.

“The amount you repay is based on your income – including any benefits you receive – and what you can afford. After you apply for a Budgeting Loan, you’ll get an email, text or letter telling you if you’ve been offered a loan. This explains how much your weekly repayments will be if you accept the loan.”