As the cost of living keeps rising across the UK, many families on low incomes are struggling to stay afloat.
To ease some of this financial pressure, the UK government, through the Department for Work and Pensions (DWP), continues to offer the Budgeting Loan — an interest-free loan that helps cover urgent or unexpected expenses.
This isn’t a cash handout, but it’s a loan with zero interest and flexible repayments that come directly out of your benefits. In 2025, eligible claimants can borrow up to £812, depending on their household needs.
It’s a lifeline for those who need help managing essentials without falling into high-interest debt traps.
Purpose
The Budgeting Loan is designed to cover necessary one-time costs. Whether it’s a broken fridge, rent deposit, or a trip to the hospital, this loan helps you handle what life throws at you without going into unmanageable debt.
Common uses include:
- Buying furniture and household appliances
- Maternity items or funeral costs
- Advance rent for a new home
- Emergency travel for health or work-related reasons
Since the loan is repaid over time and interest-free, it’s a solid option for benefit claimants who need a short-term financial boost.
Amounts
How much can you actually borrow? That depends on your family situation, your savings, and if you already owe a Budgeting Loan.
Here’s a quick look:
| Household Type | Maximum Loan Amount |
|---|---|
| Single person | £348 |
| Couple without children | £464 |
| Family with children | £812 |
If you’ve already got an unpaid Budgeting Loan, your limit might be reduced. The DWP looks at what you can realistically afford to pay back without hardship.
Eligibility
To qualify in 2025, you need to have been on one of the following benefits for at least 26 weeks straight:
- Income Support
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Pension Credit
Universal Credit recipients aren’t eligible for this loan, but they can apply for a similar Budgeting Advance instead.
Also, your total savings must be below £1,000, or £2,000 if you’re over 63. If you’re part of a couple, this limit applies to your combined savings.
Repayment
This is where the Budgeting Loan really shines. It’s interest-free, and you pay it back through deductions from your regular benefits.
Repayment usually happens over 2 years (104 weeks), and the amount is adjusted to make sure it doesn’t stretch your budget too thin.
Here’s a repayment snapshot:
| Loan Amount | Weekly Deduction | Duration |
|---|---|---|
| £400 | £5.00 | 80 weeks |
| £812 | £7.80 | 104 weeks |
If your benefits stop during repayment, DWP will work with you to set up an affordable repayment method.
Apply
To apply, grab a form SF500 from GOV.UK or your local Jobcentre Plus. Here’s how to apply:
- Fill in your personal and financial details
- Specify the loan amount and reason
- Submit the form online or via post
You’ll usually get a decision within 7 to 10 working days, and if approved, the money goes straight to your bank account.
Online
Want it quicker? Apply online.
Benefits of digital applications:
- Faster decision
- Fewer delays from post
- Easy progress tracking
You can still apply by post if that’s easier for you — both routes are valid.
Usage
You can’t just use this loan for anything. Here’s a quick look at what’s allowed and what’s not:
| Allowed Uses | Not Allowed Uses |
|---|---|
| Household appliances/furniture | Fines or court fees |
| Medical or job-related travel | Business costs |
| Maternity/funeral expenses | Regular living costs (food, bills) |
| Rent advance or home moving | Paying off private debts |
DWP may decline your application if your reasons don’t meet the criteria. Be honest and clear.
Timeline
Once approved, funds are transferred within 5 to 10 days. Repayments start from your next benefits payment. No extra steps needed unless your benefit ends — in that case, DWP will contact you to set up repayments manually.
It’s smart to apply early in the year when processing is often quicker and before urgent expenses pile up.
The 2025 Budgeting Loan remains one of the most helpful tools for people on low incomes dealing with essential expenses. It gives you breathing room without charging interest and lets you repay at a pace that matches your situation.
If you’re eligible, don’t wait — apply before your needs become emergencies. A little planning now can go a long way later.
FAQs
How much can I borrow in 2025?
Up to £812 depending on household type.
Is the Budgeting Loan interest-free?
Yes, it’s completely interest-free.
How do I apply for the loan?
Use form SF500 online or from Jobcentre Plus.
When do repayments start?
From your next benefit payment cycle.
Can I get this loan on Universal Credit?
No, you need to apply for a Budgeting Advance instead.
