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:

  • before January 2018, over a maximum 6 month period where your advance has been paid after a new claim or a change in your circumstances; from January 2018, over a maximum of 12 months; 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 or twelve 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 maximum 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.

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. If these rates are used, you cannot challenge that by appealing, although you could ask the DWP to use its discretion to recover at less than the maximum rate in your case.

If, when actually making deductions from your UC, the DWP ignore those those rates (i.e and insist on recovering at 40 per cent of your monthly UC standard allowance), then arguably you can challenge that. You can ask the DWP to look at their decision to recover at the 40 per cent rate again (by asking for a 'mandatory recosideration'). However, there is no right of appeal. For more detail on mandatory reconsiderations, see Ask CPAG online - Mandatory Reconsideration.

Remember 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.