Universal Credit is designed to offer assistance to people who are out of work, unable to work or who are working but in receipt of a low income. Undoubtedly, the payment has been a lifeline for many claimants, particularly due to the financial challenges brought about by the COVID-19 pandemic over the last year and a half. As a result of this, the payment which is overseen by the Department for Work and Pensions (DWP) underwent a boost, worth some £20 per week – or £1,000 per year – a welcome increase for many claimants.
However, this increase was only intended to be temporary. Under current plans, it is to be removed at the end of September or the end of October for claimants.
Some have lamented that they will no longer have the financial security the uplift has provided to them over this period.
But the Government said it is now shifting its focus towards getting people back into work, namely through its Plan for Jobs, and is taking action to increase wages.
For those who remain on Universal Credit, however, the price of day-to-day life may be a challenge. This can be exacerbated if unexpected costs crop up which often have to be dealt with urgently.
This means they will need to make repayments through their regular Universal Credit payments – and these will be lower until the sum is paid back in full.
Those who no longer receive Universal Credit subsequently, will be required to repay the sum by other means. This could be through other benefits, or wages.
Budgeting Advances will need to be repaid by recipients within a 12 month period.
How much a person can get depends on whether they can pay the loan back, primarily.
But it also depends on if someone has savings over £1,000. The DWP will reduce the loan amount they offer to a person by £1 for every £1 they have in savings over this threshold.
The smallest amount individuals will be able to borrow is £100, but this can increase depending on someone’s circumstances.
Single people can get up to £348, while those who are part of a couple could receive up to £464 to assist with their needs. The largest sum may be available to Universal Credit claimants with children. These people can get up to £812 in a Budgeting Advance.
There are, however, eligibility rules which are important to bear in mind when it comes to receiving a Budgeting Advance.
People must have been receiving Universal Credit or another eligible benefit for six months or more, unless they need the sum to help them start a new job or keep an existing role.
Britons must have also earned less than £2,600 – or £3,600 jointly for couples – within the last six months. Furthermore, they must have paid off any previous Budgeting Advances.
The DWP has warned claimants must make payment arrangements for their Budgeting Advance if they go on to move off Universal Credit. If they do not, then there will be consequences.
Its website explained: “If you don’t make payment arrangements, the DWP can recover the amount you owe by either contacting your employer (where you have one) to arrange for deductions to be made from your earnings.
“Or asking an independent debt collection agency to collect this money on our behalf (you should deal directly with the independent debt collector to arrange repayment).”