Your guide to the Benefit System

Looking after British Families

Guide to the UK Welfare State

The UK welfare state is designed to help British families when they fall upon hard times. If you are struggling to cope with your financial situation, learn more about what benefits you may be entitled to and how you can make a claim.

This guide is here to provide information about how the UK’s welfare state works and practical advice about how to make a claim if you need to do so. On top of this, you will find information about why the welfare state was founded, how well the UK welfare system compares to welfare offered in other countries and what the main challenges are that the UK welfare system faces today.

Table of Contents

History of welfare reform
How the UK welfare system works
Benefits for working parents
Benefits for unemployed
Benefits for disabled
Benefits for heating expenses
Benefits from local councils
Housing benefits
Universal credit
Benefit cap
Pension system
Social welfare
Illegal immigrants
Bereavement support

How to Use this Guide to the Benefits System in the UK

The structure of this guide is as follows: Firstly, this guide begins with two general chapters: one about the history of welfare in the UK and the second gives a general explanation of how the UK welfare system works and explores how it compares to other countries. Chapter 3 – 12 explains the main benefits that are available to citizens of the UK. Look at this section for information about benefits for new mothers, people who have children, benefits for people who are unemployed or on a low income, benefits for disabled people, benefits to help with heating expenses, local council benefits and housing benefits. We then explain in chapters 13 – 17 how the pension system works and how recent and future welfare reforms affect people who need to make a claim. On top of this, we discuss the way that benefits claimants are viewed by society, what impact immigrants have on the system and support people can claim after suffering a loss.

Which lenders will approve loans on benefits?

As a loan company receiving loan applications from individuals on benefits as well as those in employment, we decided to research the lending practices of other short-term loan providers in relation to applicants on benefits. From the results in this table we can see that most financial institutions recognize benefits as a valid source of income when evaluating loan applications.

Generally acceptAdditional information
CashfloatNoUnable to approve applicants solely on benefits, but will consider if benefits are in addition to income from a salary.
DraftyYesApplicants must also have a minimum income of £1200 per month to apply.
Fast Loan UKNoMust be in part or full time employment.
Lending StreamYesApplicants must also have a minimum income of £1250 per month to apply.
LoanPigYesApplications are handled on a case-by-case basis.
Mr LenderYesMust also have a regular income of at least £800 (net) per month.
Payday UKYesMust be able to show that you can afford repayments.
PaydayBadCreditNoAccept bad credit, but cannot offer to the unemployed or those relying solely on benefits
QuidmarketNoThey can not provide loans for customers on benefits.
Sunny LoansYesApplicants will need to have a solid credit report and a source of income.
WageDayAdvanceYesConsider all benefits as income.

Although Cashfloat may provide loans for people on benefits under very specific criteria, we very strongly advise you to check if you’re receiving all the benefits you may be eligible for and only use payday lenders as a final resort once all other avenues have been exhausted.

Written by: Becky Hall
Last modified:

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*Money will be funded to your bank within 1 hour of approval - Mon-Fri during working hours.

Representative example: Borrow £700 for 6 months. 1st monthly repayment of £168.45, 4 monthly repayments of £224.60, last monthly repayment of £112.20. Total repayment £1,179.05. Interest rate p.a. (fixed) 185.39%. Representative APR 611.74% Our APR includes all applicable fees. Daily interest is capped at 0.798%.

Warning: Late repayment can cause you serious money problems. For help, go to