Universal Credit new claim advances are made on account of a claimant’s expected future Universal Credit entitlement. They are available to those who cannot wait until their first Universal Credit payment is due, in order to provide extra financial support for those who need it most. Because this payment is an advance of entitlement, this is recovered over time.
It was announced at Autumn Budget 2018 that there would be an increase to the maximum recovery period for Universal Credit advances from 12 to 16 months from October 2021.
There is no minimum recovery rate for Universal Credit advances. The rate deducted from a claimant’s Universal Credit is generally determined by the amount of their entitlement advance divided by the number of monthly assessment periods which they choose at the outset for the advanced amount to be recovered from. This is subject to an overall maximum rate of 40 per cent of the claimant’s standard allowance. As a result of the change introduced in the 2018 Autumn Budget, from October 2019 this maximum will reduce to 30 per cent of the claimant’s standard allowance.
During the recovery of the advance, exceptional circumstances may occur that were not foreseen when the advance was taken out. For example, hospital visits resulting in unexpected and regular bus/taxi fares. If these circumstances push the claimant into genuine hardship resulting in difficulty repaying the advance over the agreed recovery time, a maximum 3-month deferral can be considered.