Holding answer received on 20 May 2019
The maximum amount a claimant can receive as a new claim advance payment is 100 per cent of their total indicative Universal Credit award. The claimant can decide the length of repayment period when they request the advance. This can be up to a maximum 12 months. The rate of repayment is decided by dividing the total advance amount by the agreed repayment period.
Affordability is managed by ensuring the recovery rate is not more than the equivalent of 40 per cent of the standard allowance and help is available for those struggling to meet the recovery rate once recovery begins. In many cases, because claimants choose to repay advances over many months, advance repayments constitute less than 40% of a standard allowance. In exceptional circumstances, recovery can be deferred for up to 3 months from the start of the recovery period.
Advances are not loans; they are an interest free advance payment of benefit, available to help people who need immediate financial support, which is then recovered over an agreed period. The Department has taken a number of steps to ensure that advances meet the needs of claimants and that recovery arrangements are personalised and reasonable. From October 2019 we are reducing the maximum rate of deductions to 30 per cent and from October 2021 we are increasing the maximum recovery period for advances from 12 to 16 months.