Budgeting Loan: the interest-free loan for people on legacy benefits
This scheme is open.
Available across the whole of the UK.
A Budgeting Loan is money the Department for Work and Pensions lends you against certain older benefits, to help with a one-off cost. Like its Universal Credit equivalent, the Budgeting Advance, it is a loan and not a grant: you pay back exactly what you borrow, taken automatically out of your benefit afterwards. The two schemes are easy to confuse: comparing what GOV.UK publishes for each shows the maximum amounts are identical — but you can only use the one that matches the benefit you actually get.
“You could get up to: GBP 348 if you're single, GBP 464 if you have a partner, GBP 812 if you or your partner claim Child Benefit. You normally have to repay the loan within 2 years (104 weeks).”
Budgeting Loan or Budgeting Advance — which is yours?
“If you currently get Universal Credit, you cannot get a Budgeting Loan. Apply for a Budgeting Advance instead.”
You also cannot get a Budgeting Loan if you get New Style Jobseeker’s Allowance or New Style Employment and Support Allowance, if you are involved in industrial action, or if you already owe a set amount for earlier Budgeting Loans or the discontinued Crisis Loan.
Who can apply
To apply, you need to have been getting one or more of Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, or Pension Credit for the past 6 months.
“If you moved from Universal Credit to Pension Credit, any time spent claiming Universal Credit will count towards the 6 months.”
That is a genuine exception, so do not assume a recent move onto Pension Credit resets the clock. If you live in Northern Ireland, GOV.UK is explicit that the application route is different there, so check the Northern Ireland-specific guidance rather than using the online form for Great Britain.
How much you can get
The maximums below match the amounts GOV.UK sets for the Budgeting Advance exactly (see our Budgeting Advance page) — one reason the two schemes are so often mixed up. What you are actually offered depends on whether you can afford to pay it back, and on any savings you hold.
| Budgeting Loan maximum for single person | £348 |
|---|---|
| Budgeting Loan maximum for person with partner | £464 |
| Budgeting Loan maximum for those claiming Child Benefit | £812 |
A larger amount of savings than a set threshold — higher if you or your partner are over a set age — is taken into account and can reduce or rule out an award, as can an existing Budgeting Loan or Crisis Loan you are still repaying.
What a Budgeting Loan can pay for
- furniture or household items, including white goods such as washing machines
- clothes or footwear
- rent in advance
- costs linked to moving house
- maintenance, improvements or security for your home
- travel costs within the UK
- costs linked to starting a new job
- maternity costs and funeral costs
It can also be used to repay a hire purchase loan or an earlier loan taken out for one of these same purposes. Crisis Loans, which used to cover more general emergencies, have been discontinued and are not available at all any more.
Repayment: interest-free, but automatic
A Budgeting Loan charges no interest — you only ever repay the amount you borrowed. Repayments are taken automatically out of your benefit rather than being something you arrange yourself, and how much comes out each time is based on your income, including any benefits, and what DWP judges you can afford.
“You normally have to repay the loan within 2 years (104 weeks).”
You are told your weekly repayment amount by email, text or letter before you have to accept the loan. If you stop getting the qualifying benefit before it is repaid, DWP Debt Management writes to you to arrange how you repay the rest — either in full or through regular monthly payments.
How to apply, and what happens next
- Check you meet the eligibility rules above before applying.
- Apply online, which GOV.UK says is quicker, or fill in the paper form SF500 if you cannot apply online.
- Choose how you want your decision — email or text is faster than a letter.
- If you are offered a loan, you need to accept it before you get the money.
Applying online usually gets you a decision within a matter of days if you choose email or text, and somewhat longer by letter; a paper application takes longer throughout. If you disagree with the decision, or with the amount offered, you can ask for it to be looked at again, and then ask the Independent Case Examiner for a further review if you are still unhappy — but your request has to reach DWP within a set number of days of the date on the decision letter, so do not leave it.
Common questions
Should I apply for a Budgeting Loan or a Budgeting Advance?
It depends on what you already get. Budgeting Loan is for Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, or Pension Credit. If you get Universal Credit, you need the Budgeting Advance instead — you cannot get a Budgeting Loan at all while on Universal Credit.
Is a Budgeting Loan free money?
No. It is an interest-free loan, so you only pay back what you borrowed, but you do have to pay it back — automatically, out of your benefit, until it is cleared.
How much can I get from a Budgeting Loan?
The maximum depends on your circumstances — a lower amount for a single claimant, more for someone with a partner, and more again if you or your partner claim Child Benefit. What you are actually offered depends on whether you can afford the repayments.
Does a Budgeting Loan charge interest?
No. It is interest-free — you repay only the amount you were lent.
How long do I have to repay a Budgeting Loan?
Normally within 2 years (104 weeks), through automatic deductions from your benefit.
What can I use a Budgeting Loan for?
Essentials such as furniture, white goods, clothing, rent in advance, moving costs, home repairs or security, travel, starting a new job, maternity costs or a funeral. It is not for ongoing living costs.
Related guides
- Budgeting Advance: the Universal Credit loan you pay back
- The Crisis and Resilience Fund: help from your council in England
- Scottish Welfare Fund: Crisis Grants and Community Care Grants explained
- Discretionary Assistance Fund (DAF): emergency grants in Wales
- Discretionary Support in Northern Ireland: grant or interest-free loan?
Information on this page was checked against the official guidance on 25 August 2026. The source page was last updated on 11 February 2025.
This is general information, not financial or legal advice. Money Decisions UK is not authorised by the Financial Conduct Authority and does not arrange, recommend or introduce any credit, debt or mortgage product.