Universal Credit extension: Are you entitled to delay your advance repayments?
Coffey questioned on Universal Credit uplift and legacy benefits
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Universal Credit is available to those who are out of work or on a low income. As of January 13, six million people were receiving Universal Credit, which is an uplift of 98 percent from March 12, 2020. During the initial months of the coronavirus pandemic, there was an increase in the number of advances being paid. Now new changes are being introduced to Universal Credit, but will you be affected?
What is Universal Credit?
Universal Credit is a benefit payment available to eligible recipients on a monthly or bimonthly basis to help them with the cost of living.
The payment is designed to support individuals who are out of work or on a low income.
Universal Credit replaced these payments, which are called legacy benefits by the Department for Work and Pensions:
- Income support
- Working tax credit
- Income-based jobseeker’s allowance (JSA)
- Income-related employment and support allowance (ESA)
- Housing benefit
- Child tax credit.
What are Universal Credit advances?
Advance payments for Universal Credit are available to those who do not have enough money to live on before their first payment of UC arrives.
Typically you receive your first payment of Universal Credit, seven days after the end of your first assessment period.
After which you will normally be paid monthly on this date.
Universal Credit advances are given in advance if you cannot afford food or rent.
These payments need to be repaid.
Repayments are given a little at a time from your future UC payments or by other means if you do not receive UC payments any longer.
If you are already receiving Universal Credit you may also be able to get a Budgeting Advance to help pay for emergency household costs, such as getting a job, buying a cooker or staying in work.
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In his Spring Budget 2021, Chancellor Rishi Sunak revealed an extension of advance loan repayments.
The Chancellor said the UK Government would extend “support for the lowest paid and most vulnerable”.
He added this would include the extension of the repayment period for advance payments issued for UC.
The policy change was originally due to come into force from October but instead will come into effect from April.
Currently, all those who apply for advance repayments must repay them within a 12-month period.
However, from next month, new recipients will be entitled to repay it over 24 months.
The Budget reads: “The Government will support claimants to keep more of their Universal Credit awards while ensuring they meet their financial obligations by bringing forward previously announced changes.”
This allowance does not just include an advance repayment period though as the maximum rate at which deductions can be made which is due to reduce from 30 to 25 percent of the standard allowance.
In addition to the extension of the repayment period for advances, millions of claimants will also see their payments boosted for a further six months.
The £20 a week uplift, previously due to end on April 6, will now remain in force until the end of September.
The Universal Credit minimum income floor will also not return until August.
The higher surplus earnings threshold for Universal Credit will remain at £2,500 until April 2022, after which it will revert to £300.
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