DWP £812 loan that doesn't have to be repaid for two years

General view from the end of Kettering Road Eaton Park towards Leek Road and Hanley City Centre
-Credit: (Image: Pete Stonier / Stoke Sentinel)


Government officials have rolled out an £812 loan which benefit claimants do not have to repay for two years. The initiative from the Department for Work and Pensions (DWP) comes after a rule change.

The department's budgeting advances and loans can be used for things like one-off expenses, such as replacing household appliances. Depending on how much you borrow, you must usually pay it back within two years for a Budgeting Loan.

BirminghamLive reports how from December 2024, the repayment period on new Budgeting Advance loans will increase from 12 months to 24 months, making monthly payments lower. In his Spring Statement and Budget, Chancellor Jeremy Hunt said on March 6 in the Commons: "Nearly one million households on Universal Credit take out Budgeting Advance loans to pay for more expensive emergencies like boiler repairs or help getting a job."

READ: DWP state pension up £900 a year from today - with 8.5% rise | The state pension surpasses £11k for the first time ever

READ: HMRC Child Benefit changes from this weekend — including increased payments | Payments are to be increased and some higher earners will be excluded from the High Income Child Benefit Charge

"To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months."

A Budgeting Loan can help pay for furniture or household items (for example, washing machines or other 'white goods') and clothes or footwear. It can also help you pay for rent in advance, costs linked to moving house, maintenance, improvements or security for your home and travelling costs within the UK as well as costs linked to getting a new job, maternity costs and funeral costs.

It can also help you pay for repaying hire purchase loans and repaying loans taken for the above items. If you get a budgeting advance, you'll get reduced Universal Credit payments until you've paid off the amount you borrow. This will normally be over 12 months.

What you get will depend on how much you need - you'll agree the amount with your work coach. The DWP said: "A Budgeting Loan is interest free so you only pay back what you borrow. The repayments will be taken automatically from your benefits."

"The amount you repay is based on your income - including any benefits you receive - and what you can afford. After you apply for a Budgeting Loan, you'll get an email, text or letter telling you if you've been offered a loan. This explains how much your weekly repayments will be if you accept the loan."

Sign up to our main daily newsletter here and get all the latest news straight to your inbox for FREE