Universal credit advances

There are different types of advance available for different circumstances:

• New claim – at the start of claim
• Benefit transfer – when moving from a ‘legacy benefit’ on to Universal Credit
• Change of circumstances – when a change in circumstances leads to an increase in Universal Credit
• Budgeting – for one-off expenses

Payment of all advances is made by bank transfer into the account you are using for your Universal Credit payments. It will be in your account within three working days.

It is possible to get payment faster if there are ‘exceptional circumstances’, the example in the guidance is where you don’t have enough money to last until the advance is paid.

There are slightly different rules for repaying the different types of advances but the principles are the same.

You repay them through direct deductions from your ongoing Universal Credit payments. If you are already having deductions for sanctions or a fraud/administrative penalty that will be deducted at the same time but the total deductions each month will not be greater than 25% of your Universal Credit standard allowance (or 25% of half of the allowance for you and your partner). 

The exception to the 25% limit for deductions is where you are paying an advance at the same time as a ‘last resort deduction’ for mortgage interest arrears, service charge arrears, rent arrears or gas or electricity arrears. If this is the case your deductions can be more than the 25% limit.

The new claim advance is payable at the start of claim because of the 5 week wait for the first payment. 

You should be able to request the advance online when you make your claim but you can also make the request on the telephone or by asking your work-coach.

For an advance to be paid:

• you must be in financial need
• you must have likely entitlement to Universal Credit and your ID must be verified, you don’t need to have signed your claimant commitment but the work-coach should be sure you are likely to do so
• there must be no doubt that you will pass the Habitual Residence Test and this test includes a requirement that you have a right to reside

Establishing financial need

Guidance says you and your partner if you have one, should be asked if you have enough money to live on until your first Universal Credit payment.

This can include money from:

• savings
• earnings
• redundancy payments
• support from parents’ family or friends

If you have refused to accept a claimant commitment in the past or if the work-coach thinks you might not accept a commitment they are told they must wait until that you have agreed and accepted the commitment before an advance can be paid.

If you are making a joint claim as a couple, you must both agree the advance and recovery terms.

A new claim advance can be at any time up to the last 3 working days of the first assessment period. If you request an advance within 3 working days of the end of the assessment period, you will be refused.

If you have applied for advances before and either, your claim wasn’t paid, or you had several advances paid using different email addresses, DWP staff may want to make sure that your claim is genuine.  Their guidance does state that ‘having a number of outstanding advances does not stop the claimant from receiving a further advance’. (Advances – New Claim, Universal Credit Full Service Guidance, House of Commons Library, 30 April 2018)

You should be offered an advance at the start of claim and if you turn it down, you can request it at any point up to the last three working days of the assessment period.

If you are refused an advance because there is doubt that you are likely to be awarded Universal Credit, DWP staff are advised that you must be told on the phone or on your journal.

Amount

You can borrow up to 100% of your monthly payment.  This includes all elements you are entitled to including housing costs and childcare costs if you are eligible for those.

If you choose to take part of the possible advance, you can make a further request before the last 3 working days in your first assessment period to borrow the rest.

Recovery

The advance you borrow is paid back over 24 months (12 months for claims before 12 April 2021) and the first (instalment) is taken from your first payment.

There may be some months where you do not receive sufficient Universal Credit for the full instalment to be deducted, perhaps because your earnings are higher.  In this situation you may have higher deductions when your Universal Credit increases so that your advance is still paid off in 12 months.

Hardship and the 3 month repayment ‘holiday’.

If you experience exceptional circumstances where the deductions to repay the advance cause hardship, you can have 3 months without a deduction. The examples of exceptional circumstances given in the DWP guidance is a child going into hospital causing additional transport expenses for the parents visiting. If you use the 3-month break from repayment, your advance will be repaid in 15 months so when your instalments resume they will not have increased.

A benefit transfer advance can be paid if you are transferring from legacy benefits on to Universal Credit (Advances-Benefit Transfer, Universal Credit Full Service Guidance, House of Commons Library, 30 April 2018)

Currently, this happens when you have a change of circumstances where it is necessary to make a new claim for benefit and it is called ‘natural migration’.

A benefit transfer advance can be paid if you have been in receipt of a legacy benefit within one calendar month of making a Universal Credit claim.

Financial need

Legacy benefits, paid for living costs are usually paid fortnightly. You must wait for 5 weeks until you receive your first Universal Credit payment when you transfer.  Your financial need is assumed when you transfer, and you should be paid an advance when you request one.

Amount

You can borrow up to 100% of your monthly payment. This includes all elements you are entitled to including housing costs and childcare costs if you are eligible for those.

Appeals

A benefit transfer advance is the only advance that carries a right of appeal.  The DWP does not anticipate a need to appeal as there are not hardship or affordability tests like there are for the other types of advances.

Recovery and the 3 month ‘holiday’

Benefit transfer advances are recovered over 24 months in equal instalments.  There may be months where you are not receiving sufficient Universal Credit for the deduction to be taken and the system will recalculate the remaining debt and try to deduct sufficient funds, so it is still repaid within 15 months.

If you move off Universal Credit and into work, any outstanding debt will be treated as a Universal Credit overpayment and recovered by Debt Management.  This can include recovery direct from your earnings.

Where there are unforeseen exceptional circumstances that mean the deductions will push you in to genuine hardship, you can request a maximum three-month deferral.  Full recovery is then made within 15 months.

If you have a partner, you are both liable to repay the advance. However, if you request the advance only you have to confirm that your partner has agreed to the advance and recovery terms. If you split up later, half the remaining advance is recovered from each of you.

Where a change of circumstance means, you become entitled to an increase in your Universal Credit award, you can apply for a change of circumstance advance when you report the change.

If you have more than one change of circumstance that would increase your award, you can apply for more than one advance. You can get a new claim advance and a change of circumstance advance in the same assessment period. 

You can apply for one of these advances in any assessment period where you have a change of circumstance that will increase your Universal Credit award.

Amount

You can get 50% of the increase to your Universal Credit award as an advance. You should be offered support to work out the best amount to borrow taking in to account your outgoings and ability to pay it back.

Recovery and the 3 month ‘holiday’

Recovery is made over 6 months. The deduction cannot exceed the 25% maximum deduction rate.

In exceptional circumstances where recovery will push you into genuine hardship you can ask for payments to be deferred for one month. This means the advance will be recovered over 7 months in total.

You can claim a budgeting advance to pay for one off expenses (Advances-Budgeting Advance, Universal Credit Full Service Guidance, House of Commons Library, 30 April 2018)

For example:

• items need to get in to or remain in work, such as, clothes, tools, travel, childcare
• essential household items, like furniture, cot, pram, appliances, clothing and footwear
• rent in advance or removal expenses to secure new accommodation
• improvement, maintenance, and security of your home

The advances are not intended to help pay for unexpectedly high household bills.

Award of a budgeting advance is discretionary and there is no right of appeal but if you are unhappy with a decision, you can ask for the DWP to look at it again.

You can apply for a budgeting advance at any point in an assessment period.

Eligibility

Usually you need to be on a means tested benefit continuously for at least six months before you can get a budgeting advance.

Qualifying benefits are:

• Income support
• Jobseekers allowance, income-based
• Employment and support allowance, income related
• Pension credit
• Housing benefit
• Universal Credit

Advances for work expenses

If the advance is to help you start or stay in work, you don’t need to have been on benefit for six months.  For example, you could have the advance to pay for upfront childcare costs, travel, clothing, or tools. To get an advance for upfront childcare costs, you will need a confirmed job offer. 

The Flexible Support Fund also exists for Jobcentre staff to help you with expenses to start or stay in work and in the future the Government intends to extend access for upfront childcare costs from this fund. 

Amount

Your request must be for at least £100 and up to a maximum of:

• £348 for a single adult
• £464 for a couple
• £812 for a single person or a couple with children

It is possible to borrow amounts less than £100 needed for you to start or stay in work but DWP staff are told to consider the Flexible Support Fund to cover these costs.

The maximum you can borrow is calculated following these steps:

1. calculate the maximum deduction rate - 25% of the appropriate standard allowance for your household.
2. take off any existing deductions from benefit – if you have other deductions already being made and they are higher up the priority order and are for the whole maximum deduction rate then you cannot have a budgeting advance.
3. multiply the remaining amount by 12 as the advance will be recovered over 12 months
4. cap this figure at the maximum overall advance amount for your circumstances - £348, £464 or £812 (see above).
5. reduce the remaining amount by any savings you have above £1,000. For example, if you have £1,300 in savings the amount you can borrow as a budgeting advance is reduced by £300.

The figure from step 5 will be the maximum you can borrow but you will not automatically get the maximum.  Only an appropriate amount for what you need will be advanced but limited to the figure from step 5.

Restrictions

Only one budgeting advance can be paid at a time. You cannot take a budgeting advance if you (or your partner) are still repaying a previous budgeting advance. If you start a relationship and your partner is already repaying a budgeting advance, then neither of you can take out another one until that one is cleared.

There are also restrictions based on your previous earnings. You cannot have a budgeting advance if you earned more than £2,600 in the previous six assessment periods if you are a single claimant with or without children. If you are claiming as a couple, with or without children, your allowable earnings are £3,600.

Earnings include:

• Statutory sick pay
• Statutory maternity pay
• Maternity allowance

Written notice

You must be given a written notice, that can be electronic, that contains your agreement to the amount of the advance and the deductions and timescale for repayment. This will also include agreement to repay it by other means, like an attachment of earnings, if you come off Universal Credit.

Recovery and 6 month deferral

Recovery will usually be over 12 months.

If you have a change of circumstances that means recovery over 12 months will push you in to genuine hardship, it is possible to defer payment for up to 6 months so repayment would be completed within 18 months. Guidance says this will only be possible in exceptional circumstances.

You can:

• send an email to welfarerights@ brighton-hove.gov.uk 
• write to Revenues and Benefits, Brighton & Hove City Council, 1st Floor Bartholomew House, Bartholomew, Square, Brighton, BN1 1JE
• phone the advice Line: 01273 291 116 - open Monday, Tuesday, Wednesday, 10am to 1pm