Budgeting Loans - A Quick Guide to the New Rules 
The rules (directions issued by the Secretary of State for Work and Pensions) for deciding 
budgeting loans have been revised from 3 April 2006. Some significant changes will 
affect how much people can get, depending on their circumstances. 
What are the new rules? 
You can only get a budgeting loan for: 
• Furniture and household equipment; 
• Clothing and footwear; 
• Rent in advance and/or removal 
expenses for new accommodation; 
• Improvement, maintenance and 
security of the home; 
• Travelling expenses; 
• Expenses associated with seeking 
or re-entering work; 
• HP and other debts (for expenses 
associated with any of the above). 
You will only be able to get a 
budgeting loan if: 
• You are receiving either Income 
Support , income based Job 
Seekers Allowance or Pension 
Credit (or payments on account of 
one of these benefits); and 
• You have been receiving one of the 
benefits, or have been the partner 
of someone receiving one of the 
benefits, for the last 26 weeks 
(breaks of not more than 28 days 
are disregarded). 
Independent Review Service 
for the Social Fund 
www.irs-review.org.uk 
What is different? 
The list of qualifying expenses has not 
changed. 
The basic eligibility condition has not 
changed.
What are the new rules? 
The maximum amount you can get will 
depend on how many people are in 
your household. 
Households of different sizes are given 
different weightings. Household refers 
to the people included in your benefit 
claim. 
There are three possible weightings: 
• If you are the only person in your 
household your application has a 
weighting of one; 
• A household containing you and 
your partner has a value of one and 
a third; 
• A household containing you and at 
least one child aged under 18 has a 
weighting of two and a third. 
Your maximum possible loan is worked 
out by multiplying your household’s 
weighting by a figure that reflects the 
money available in the year’s budget. 
The figure may change periodically 
depending on how the budget is being 
spent. 
E.g. If your household’s weighting is 
one and a third and the figure based 
on the budget is £300, the maximum 
loan available is £400. 
Independent Review Service 
for the Social Fund 
www.irs-review.org.uk 
What is different? 
Under the old rules, the length of time 
you had received benefit also affected 
the amount you could get. This 
condition has been abolished. 
Extra weightings used to be added for 
larger households. A couple with a 
child would have a larger weighting 
than a single parent and a child, and 
any additional children also increased 
the household’s weighting. 
This principle has not changed.
What are the new rules? 
Any existing budgeting loan debt will 
be taken off the maximum amount. 
E.g. If you already owe £150 and your 
maximum loan is £400, you would be 
left with a loan of £250. 
If at the end of these steps your 
circumstances mean you cannot have 
a loan, your application will be refused. 
The total you and your partner owe the 
Social Fund, including budgeting loans 
and crisis loans cannot be more than 
£1,500.E.g. If you owed £150 in 
budgeting loans and £350 in crisis 
loans and your partner owed a total of 
£400, you could borrow an extra £600. 
If you and your partner have capital 
(such as savings or shares, or a house 
you own but do not live in) this may 
affect the amount you can receive. 
If both you and your partner are under 
60 years old, anything over £1,000 will 
be taken off the loan you would 
otherwise receive. If either you or 
your partner is over 60, the capital you 
can have before it affects your loan is 
£2,000. 
Independent Review Service 
for the Social Fund 
www.irs-review.org.uk 
What is different? 
Under the old rules twice the amount of 
budgeting loan debt would be taken off 
the possible maximum, so in the 
example opposite only £100 would be 
left. 
The old rules included extra 
circumstances that could be taken into 
account to improve your chances of 
getting a payment, but these have been 
abolished. 
Under the old rules the most you and 
your partner could owe was £1,000. 
The limits used to be £500 for people 
under 60 and £1,000 if either you or 
your partner were over 60.
What are the new rules? 
The smallest loan that can be awarded 
is £100. 
You must be likely to be able to repay 
the loan. The Decision Maker will take 
account of your income, any existing 
Social Fund repayments and any other 
regular commitments you have. 
Independent Review Service 
for the Social Fund 
www.irs-review.org.uk 
What is different? 
Under the old rules, the smallest loan 
was £30. 
This principle has not changed.