Thousands of people struggling on Universal Credit may be eligible for a budget advance of up to £ 812 – but since it’s a loan, you’ll have to pay it back
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Universal Credit applicants struggling after Christmas can apply for assistance worth up to £ 812.
The assistance is known as the budget advance and can be used to cover emergency household expenses.
You may also be eligible to receive payment if you need financial assistance to find a job or stay at work, or for funeral expenses.
But because a budget advance is technically a loan, you’ll have to pay it back through your future universal credit payments.
However, you do not pay any interest, unlike expensive payday loans and other forms of borrowing which can be difficult to master.
We explain below how a budget advance works, who is eligible and how to apply.
How much can I borrow with a budget advance?
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The smallest amount you can borrow is £ 100 and the maximum is £ 812 if you have children.
You can get up to:
The amount you can get depends on your ability to repay the loan and your savings of over £ 1000.
The amount you can borrow is reduced by £ 1 for every £ 1 you save above the £ 1,000 threshold.
Who is eligible for a budget advance?
You must meet certain criteria to get a budget advance – so not everyone on Universal Credit will be accepted for one.
To be eligible for financial assistance, you must have been receiving one of the following benefits for at least six months:
- Universal Credit
- Employment allowance and income support
- Income support
- Income-related jobseeker’s allowance
- State pension credit
The only time this won’t apply is if you need the money to help you start a new job or keep an existing one.
You must also have earned less than £ 2,600 (£ 3,600 jointly for couples) in the past six months and have repaid all previous budget advances.
How to repay a budget advance?
You’ll have to pay back your budget advance through your future Universal Credit repayments – but as we mentioned above, you won’t pay interest on top of that.
The first deduction is made on the day you get your next payment after being accepted for the loan and the full amount must be paid back within 12 months.
If you stop claiming universal credit, you will still have to repay your budget advance.
Payments will either have to come from your salary, if you are currently working, or from other benefits you may receive.
If you do not make payment arrangements, the DWP may contact your employer to collect what you owe.
The DWP can also contact a debt collection agency to collect any overdue payments – keep this in mind before applying for a loan.
How to request a budget advance?
If you are having difficulty and need a budget advance, you will need to apply through your Jobcentre Plus work coach.
They should explain how much you can borrow and how much you will need to pay back each month.
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