Ask CPAG Online - How do you repay a universal credit advance?

This section looks at how you repay the universal credit advance.

The DWP recover the advance from you by making deductions from your UC once it is in payment. Under official guidance, the advance must be recovered:

  • over a maximum 6 month period where your advance has been paid after a new claim or a change in your circumstances; or
  • over a maximum 12 month period where your advance has been paid after a ‘benefit transfer’.

Repayments start from your next payment of UC.

Do you need to adjust your repayments?

If you are repaying a universal credit advance but find that you can no longer afford the repayments, you can ask the DWP to adjust them. Official guidance suggests that this is only possible in ‘exceptional circumstances’. The only change the guidance sets out is that the DWP may ‘defer’ payments for up to three months.

What is the rate of repayment?

When considering whether you can afford to repay the advance, the DWP use a ‘repayment cap’ of 40 per cent of your monthly UC standard allowance (applied over a six month repayment period). Therefore the DWP will recover the advance by making deductions of up to 40 per cent of your monthly UC standard allowance.

However, it is arguable that, for the deductions that are actually made, maximum amounts are set out in regulation 11 of the Social Security (Overpayments and Recovery) Regulations 2013. This sets out the rate of recovery for UC paid in excess of entitlement, and arguably should apply to advances once they are paid.

NB - the power to recover advances is at regulation 10 of the Social Security (Payments on Account of Benefit) Regulations 2013 but that does not set out rates of recovery.

The rates are:

  • 15 per cent your monthly UC standard allowance if you don’t have earnings; or
  • 25 per cent of your monthly UC standard allowance if you have earnings; or
  • 40 per cent of your monthly UC standard allowance in cases of fraud or deception or repaying a hardship payment.

Arguably therefore the maximum rate at which you repay should usually be no more than 15 per cent or 25 per cent of your monthly UC standard allowance.

Remember however that the DWP use the 40 per cent rate in deciding whether to award you an advance in the first place. So if you insist on a lower rate when making our application, the DWP may refuse to pay you an advance.