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Debt and Money Advice, Benefits, Priority Debts, Benefits & Entitlements· 3 min read

Priority or Non-Priority Debt: Social Fund Loans

If you have a Social Fund loan (such as a Budgeting Loan or Budgeting Advance), repayments are usually taken directly from your benefits. This can make it harder to cover your essential bills. Contact us for free advice on managing your repayments and checking what other support you may be entitled to.

Social Fund loans and payments

If you are repaying a Social Fund loan and finding it hard to manage, you are not alone. These repayments are usually taken straight out of your benefits before you receive them. That can leave you short of money for rent, bills, and other essentials. We can help you look at your full situation and explore your options.

Why Social Fund loans can become a priority

Social Fund loans are normally treated as non-priority debts. However, because repayments are deducted directly from your benefits (known as "deducted at source"), they can effectively become a priority. If the deductions are leaving you without enough money to cover your essential outgoings or to pay priority debts like rent or council tax, you need advice as soon as possible.

Payments you do not have to repay

Some Social Fund payments are grants or entitlements, not loans. These are legally mandated based on your entitlement rather than available budget. You do not need to repay them (unless stated below), but you do need to be receiving a qualifying benefit to get them.

Sure Start Maternity Grants (SSMG)

A £500 one-off, non-repayable grant to help with the costs of a new baby.

  • Generally available for your first child, or for multiple births (twins or triplets), provided there are no other children under 16 in your household.
  • You or your partner must be receiving a qualifying benefit, such as Universal Credit, Income Support, or Pension Credit.

Funeral Expenses Payments (FEP)

Helps with the cost of a funeral if you are on a low income and receiving qualifying benefits.

  • Covers necessary burial or cremation fees, plus up to £1,000 for other expenses such as the funeral director's fees and flowers.
  • If the person who died left money (an estate), the payment may need to be repaid from that estate.

Cold Weather Payments

A payment of £25 for each seven-day period of very cold weather (0 degrees Celsius or below) between 1 November and 31 March.

  • Automatically paid to those on qualifying benefits, such as Pension Credit or Universal Credit (subject to specific criteria).

Winter Fuel Payments

An annual tax-free payment to help with heating costs for households that include someone over State Pension age.

  • From winter 2025/26, payments are available for households with at least one person over State Pension age. If your household income is over £35,000, the payment may be recovered through tax.

Loans you need to repay

These are the parts of the Social Fund that create a debt. They are interest-free, but you do need to pay them back.

Budgeting Loans

Interest-free loans for essential items such as furniture, clothing, or rent in advance.

  • You must have been receiving a qualifying benefit (Income Support, Pension Credit, ESA, or JSA) for at least 6 months.
  • The loan must be repaid within two years.

Budgeting Advances (Universal Credit)

Similar to Budgeting Loans, but available if you are on Universal Credit.

What you can do

  • Check your benefit statement. Look at how much is being deducted for loan repayments each month.
  • Contact us if the deductions are leaving you short. We can help you understand whether the repayment amount can be reduced and how to manage your other bills alongside it.
  • Check whether you are entitled to any of the grants or payments listed above. Many people miss out on support they could be claiming.

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All our advice is free and confidential.

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