Backdating of SMI claims limited to 3 April 2023 for claimants with earnings in every assessment period before that date

Support for Mortgage Interest (SMI) guidance sets 3 April 2023 as the earliest date to which a Universal Credit claimant who had earnings in every assessment period before then can backdate an SMI loan¹. The guidance, published as a deposited paper, states: "Before 3 April 2023, if a Universal Credit claimant had earnings in every assessment period, they will only be eligible to backdate their claim to 3 April 2023"¹.

SMI provides Universal Credit claimants with help towards interest payments on their mortgage and on loans for certain repairs and improvements to their home¹. It is paid as an interest-bearing loan secured against the property, normally paid direct to the claimant's lender, and is only repayable from any available equity when the home is sold, transferred, or the loan holder dies¹. Support is available for interest payments on up to £200,000 of the outstanding loan or mortgage, calculated using a standard interest rate based on the average mortgage rate published by the Bank of England¹. A mortgage or loan used specifically for adaptations to meet the needs of a disabled person in the household does not count towards the £200,000 limit¹.

Claimants may qualify for an SMI loan after receiving Universal Credit continuously for three assessment periods, except where a claimant receives a nil award for any reason, in which case the qualifying period starts again¹. Claimants who want to backdate an SMI loan to before 3 April 2023 must have served a nine-month qualifying period, described as nine assessment periods regardless of earnings, except where a claimant receives a nil award¹. They are then only eligible to claim SMI for the latest assessment period following any assessment period in which they received earnings¹.

The guidance gives an example: a claimant receiving Universal Credit from March 2022 with earnings throughout the claim applies for an SMI loan in October 2023 and wants to backdate it. SMI can only be backdated to 3 April 2023 because of the earnings received in every assessment period before that date¹. In a second example, a claimant receiving Universal Credit since March 2022 who had earnings in February 2023 and none from March 2023 onwards can only backdate SMI to March 2023, the latest assessment period after the claimant had received earnings¹.

The guidance also notes that claimants may wish to check with their lender before choosing to receive backdated SMI payments, as some lenders may charge a penalty for early repayment¹.

Why it matters for households

The backdating limit affects Universal Credit claimants with a mortgage who had earnings in every assessment period before 3 April 2023 and who later apply for an SMI loan. For that group, the earliest date an SMI loan can cover is 3 April 2023, so interest payments falling due before then cannot be met through backdated SMI¹. Claimants without earnings in every assessment period before that date face a different route: a nine-month qualifying period, after which SMI can only be claimed for the latest assessment period following any assessment period in which they had earnings¹.

Because SMI is a loan rather than a grant, any amount received, including a backdated amount, adds to a balance secured against the property and repayable with interest when the property is sold, ownership is transferred, or the claimant dies¹. Voluntary repayments can be made, with a minimum of £100 unless the total outstanding balance is less than £100¹. The guidance states that overpayments should not be actively recovered¹.

Other rules interact with the timing of payments. A nil Universal Credit award for any reason resets the three-month qualifying period, though claimants whose award is reduced to nil do not need to re-serve it if they are awarded Universal Credit again within six months¹. Claimants moving to Universal Credit from Income Support, income-based Jobseeker's Allowance or income-related Employment and Support Allowance, or claiming within one calendar month of that benefit ending, have time spent on that benefit counted towards the qualifying period¹. Those moving under managed migration who were receiving SMI on a legacy claim have it closed and set up again for Universal Credit from the day after the legacy SMI ended, with no qualifying period to serve¹. Help with service charges may be available after nine assessment periods of Universal Credit with no earned income¹.

What happens next

The guidance sets out the position for backdating SMI loans and does not announce a further change of date. No end date or review of the 3 April 2023 limit is reported¹.