Redundancy looming - what can I claim?

ManicMum

Hello

My husband is either going down to a 4 day week, with potential to still be laid off within weeks or company will opt for some lay offs immediately with potential for reduced hours after that. SO can't win really. I am a self-employed childminder but probably about to lose my income too as mindee's parent is probably going to lose their job too. Double whammy.

We have 3 children under 6. I went on the Directgov website and did their benefits checker. They asked me what income was for 08/09 but I fail to see what that has to do with it. if you are unemployed, your need is now and not what you earned last year surely?

Anyway, I couldn't believe it when it said all we would get is £64 a week JSA. Plus normal tax creds which we get anyway which are about £40 a month plus child benefit. Is this a joke? How the hell are you supposed to support a family on that?

Ok, we are not desperate. I do have some cash in the bank but I am planning to pay a chunk off my mortgage in next few weeks because I resent having to use that for living expenses when I have worked hard to squirrel that away whereas if I'd spent the lot, I'd be elegible for help straightaway.

Gets more complicated as we have a BTL property. In the questions it asked about assets. Of course I put down that we had a property worth about £210k which is rented out. So, as well as the above, my other question is can they force the sale of your other property? To be honest, we were thinking about doing this anyway as would take a weight off our shoulders. So are they basically saying you are entitled to no help because you have equity in a BTL property? Would walk away with about 60k (hopefully). But what if we couldn't sell?

Sorry - I know we aren't in desperate straits yet but I would really appreciate advice so as to plan our way through this.

many thanks

jdturk

you are asset rich and you have savings which are there for when hard times come. They have come and you will have to use them.

You cannot expect the government to give you benefits when you have plenty of resources available to you at the moment. Benefits are for those in dire times (apparently) not for people with BTL houses with 60k equity in it

exil

Bear in mind that as a couple you would only be getting £100 a week or so in means-tested benefits in addition to the Child Tax Credit and Child Benefit you're already entitled to (you'd also qualify for Council Tax Benefit, free dental treatment and the like). And you'd have to use up more or less all the equity realised by selling the property before you can claim even this. Might be better to batten down the hatches and live as best you can on the JSA, tax credits, child benefit and rental income and using up savings and hope to find jobs sooner rather than later, in preference to selling your BTL and then finding you still have only £100 a week to live on.

Means tested benefits have always existed and they have always required you to liquidise all your saleable assets (other than your home) and then run down what these have realised and your savings before you can claim them.

Any change to this system would instantly cause the Daily Mail to run "benefits for millionaires" headlines.

I do have every sympathy for you - I'm just stating facts!

ManicMum

Thank you for your points of view.

I am leaning towards selling the BTL but I would still like to find out for definite whether the BTL comes in to the equation in terms of whether you would have to sell it. For me, the BTL is part of my pension and I am not sure they would make people cash in pensions (if that were possible). If I sold BTL, idea is that I would use the whole of the equity to pay off some of my residential mortgage. Are you saying the government would say that is money I should be living on? If that money goes into my mortgage account it is gone or would they say I had somehow 'cheated' and shouldn't have done that? This is money that I would have had in my residential property anyway and was only taken out to purchase BTL. So am I expected to use all my equity in my BTL to live on whereas for someone else who hadn't got a BTL but had retained equity solely in their residence would still have all their equity. That doesn't seem fair. We only did BTL thing to better ourselves and help with pension provision and then you get it all taken off you.

I know we are not as badly off as some but it is still a shock and upsetting nonetheless.

Thanks

Somerset

ManicMum wrote: »

For me, the BTL is part of my pension and I am not sure they would make people cash in pensions (if that were possible). Thanks

Apologies for taking this off at a tangent, but it was the pension angle that intrigued me.

With most pensions, subject to some restrictions, you can take up to 25% of the value as a tax free cash lump sum after the age of 50 (soon to be 55).

So if you are on means tested benefits, but have the potential to take this tax free lump sum (from existing/previous pension), but choose not to, why is this not covered by the deprivation of income rule? After all, it's a realiseable asset ??

ManicMum

Yes, Somerset. Good point. One rule for one and one for another it would seem.

Hubby's job going from week to week at the mo so we are putting BTL up for sale next week. If sells will be one less thing to worry about. Only if we can then re-mortgage and put the equity into our residential property.

cheers.

ManicMum

If the benefits office do not see your BTL as a pension scheme, I feel really sorry for you. There must be some way for you to put that money to one side, godknows there are enough wealthy people out there who are very crafty avoiding tax bills and putting money in trusts for future generations.

That is a good question and I think somebody will come along shortly and give answers to that question.

[/QUOTE]Hi there. No one has answered question yet of whether they force you to sell or use the equity as living costs rather than be able to pay off your residential first.

Were only doing BTL to provide for ourselves later on. We are selling up and hope it sells whilst hubby still has a job so we can re-mortgage and pay off large chunk. Then at least he could get any old job to cover bills, if need be. Hope you manage to keep hold of yours. I think I had my strategy wrong anyway. Thinnk it best to spread the risk. Rather than have 1 more expensive BTL property, better to have 2 cheaper ones. So may look to do that in the future when things more settled.

cheers

Somerset

ManicMum

Be careful how/what/when you do the btl sale with regards to benefits and get advice before you commit to anything.

I think you think that if the btl sells, you release 60K equity which you pay down against your residential mortgage/re-mortgage. I would check out whether you would be expected to live off that 60K plus chunk you've already put aside. I know you are not on benefits yet, but they seem to look at deprivation of income before as well.

I'm no expert, maybe others could comment. But if I were you, I'd check it out beforehand so I didn't get any unwanted surprises afterwards.

ManicMum

Hmm, thanks Somerset. Good advice. Wonder if the benefits call centre people would know. Obviously they should but you know what it's like. will look into that unless someone on here knows answer.

thanks