The Department for Work and Pensions (DWP) is offering interest-free loans of up to £812 to qualifying benefits claimants to assist with covering one-off and essential expenses. These budgeting loans are designed for costs such as furniture purchases, travel needs, rent in advance, or other necessary household expenditures, with repayments taken automatically from future benefit payments.
According to Manchester Evening News, the minimum amount available through this scheme is £100, and the maximum varies depending on individual circumstances. The loans are structured to be repaid without interest, providing short-term financial support for those who meet the eligibility criteria.
Who Is Eligible for a Budgeting Loan
To qualify, claimants must have been receiving one or more of the following benefits for at least six consecutive months: income support, income-based jobseeker’s allowance, income-related employment and support allowance, or pension credit. If you have moved from universal credit to pension credit, any time spent claiming universal credit will count towards the six consecutive months.
Applicants are not eligible if they receive new style jobseeker’s allowance or new style employment and support allowance, are involved in industrial action, owe more than £1,500 from existing crisis loans or budgeting loans, or currently receive universal credit, in which case they should apply for a budgeting advance instead.
How Much Can Be Borrowed
Loan amounts depend on personal circumstances. Single claimants can borrow up to £348, those with a partner can borrow up to £464, and those receiving child benefit can borrow up to £812. The lowest amount you can borrow is £100.
What the Loan Can Cover
The DWP states that budgeting loans can help pay for a variety of expenses including furniture or household items such as white goods, clothing or footwear, rent in advance and moving costs, home maintenance or security improvements, travel within the UK, costs linked to starting a job, maternity costs, funeral expenses, and repayment of hire purchase loans taken for these purposes.
Budgeting Advances for Universal Credit Claimants
Those on universal credit can apply for a budgeting advance instead. This can cover living costs before receiving the first universal credit payment, essential living costs if you’ve been sanctioned, work or job interview costs, emergency household costs, and funeral costs. Repayments are usually spread over six months, deducted automatically from universal credit payments.
To apply, claimants can update their journal in their universal credit account, speak with their local jobcentre contact or work coach, or call the universal credit helpline on 0800 328 5644.
Fair Repayment Rate Policy
The Fair Repayment Rate, introduced by the DWP on April 30, reduces the maximum deduction from universal credit payments for debt repayment from 25% to 15% of the standard allowance. This policy, announced at the Autumn Budget, is designed to help 1.2 million households keep more of their income, with an average annual benefit of £420.
When the announcement was made on April 30, Chancellor Rachel Reeves said:
As announced at the budget, from today, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people.
