The Department for Work and Pensions (DWP) has published an update clarifying the rules surrounding New Claim Advances within the Universal Credit system. Issued on Friday, 11 September, the guidance followed a parliamentary inquiry about the impact of advance payments on debt management among claimants.
Labour MP Henry Tufnell of Mid and South Pembrokeshire had asked the DWP to assess how advance payments made before a Universal Credit assessment period is completed might affect debt recovery efforts. In response, Stephen Timms, Minister of State at the Department for Work and Pensions, explained the framework governing these payments.
New Claim Advances allow claimants to receive a portion of their Universal Credit entitlement earlier, giving them the option to spread twenty-five weeks of payments over twenty-four months. These advances are not classified as loans, meaning no interest is charged and there is no enforcement action initially; however, the advances must be repaid.
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Repayments are generally made through deductions from subsequent Universal Credit awards, with an agreed repayment period of up to 24 months. Claimants are expected to repay the advance within this timeframe.
According to the official gov.uk advice, claimants who need help covering expenses before their first Universal Credit payment can apply for an advance. The maximum amount available is equivalent to the claimant’s estimated first payment, which is typically repaid starting with the first monthly payment.
If claimants struggle to afford the repayments, they may request a delay of up to three months. Should a claimant cease receiving Universal Credit, they remain responsible for repaying any outstanding advances. For those moving to other benefits, deductions usually continue from those payments, while individuals leaving the benefits system will receive instructions from DWP Debt Management on repayment options.
Claimants can choose to repay the amount in full or set up monthly payments. For further assistance, contacting DWP Debt Management is advised.
Additional guidance from the Money Helper service points out reasons why advance payments might be refused, such as if a claimant lives with family or friends, has sufficient savings to last until the next payment, or has not completed identification checks at a Jobcentre Plus.
The Money Helper site also issues a warning regarding scams where third parties offer to apply for Universal Credit or government loans on behalf of claimants. Such offers are fraudulent, often involving fees and the misuse of personal information, potentially amounting to benefit fraud with serious consequences.
Claimants targeted by such scams are encouraged to report incidents via the Report Fraud website or by phone, with Police Scotland available at 101 in Scotland.
Recent data highlighted by Money Wellness in 2024 indicates that Universal Credit claimants carry higher levels of debt compared with those on legacy benefits like Income Support. On average, debt among Universal Credit recipients stood at £4,754, with nearly 20% owing £10,000 or more.