theoneaccount, redundancy and benefits

dkingdom

We're downsizing our house/life as I'm sure I'll be made redundant in the next 2 years. I should get a good redundancy payment of around £36k as I've been with the firm nearly 20 years.
I want to have a smaller £75,000 mortgage when the axe falls and therefore use the redundancy to almost half the mortgage.

I plan to do this with a Virgin One Account, so that my "redundancy" goes straight into the mortgage debt and shows as a "smaller mortgage" rather than £36k in savings.

What I want to know is how this may affect me seeking benefits if I can't find employment for a while and still have a mortgage of say £40k.

If I've paid my redundancy straight into my current account (virginone) it reduces the mortgage immediately and I still show a mortgage outstanding but "no savings" so presumably, they cannot say I have savings!? and I would qualify for income support?

any idea?

karenx

On what basis would you qualify for income support?
Its a difficult one with the savings and trying to claim JSA as they could turn around and say you could of kept the savings to live on and therefor you wouldnt get JSA as you have deliberatly used up your savings. And then if you dont get JSA how would you be able to afford to pay your mortgage every month?

dkingdom

I thought I'd qualify for JSA as I'd have no income and a small mortgage (in simple terms) and a wife and 3 small children to support.

I could "keep" the savings but where would I put them if I have a "oneaccount"?, the natural place is where all my banking happens, it would just have the effect of changing from savings to mortgage reduction.

karenx

But you potentially could have 36k in the bank if you kept it and not paid the mortgage with it so that would take you over the threshold for claiming JSA. It also goes on savings not just income.

DX2

dkingdom wrote: »

I thought I'd qualify for JSA as I'd have no income and a small mortgage (in simple terms) and a wife and 3 small children to support.

I could "keep" the savings but where would I put them if I have a "oneaccount"?, the natural place is where all my banking happens, it would just have the effect of changing from savings to mortgage reduction.

Income support and JSA are two different benefits, it would be JSA if applicable.

DX2

dkingdom wrote: »

We're downsizing our house/life as I'm sure I'll be made redundant in the next 2 years. I should get a good redundancy payment of around £36k as I've been with the firm nearly 20 years.
I want to have a smaller £75,000 mortgage when the axe falls and therefore use the redundancy to almost half the mortgage.

I plan to do this with a Virgin One Account, so that my "redundancy" goes straight into the mortgage debt and shows as a "smaller mortgage" rather than £36k in savings.

What I want to know is how this may affect me seeking benefits if I can't find employment for a while and still have a mortgage of say £40k.

If I've paid my redundancy straight into my current account (virginone) it reduces the mortgage immediately and I still show a mortgage outstanding but "no savings" so presumably, they cannot say I have savings!? and I would qualify for income support?

any idea?

They could see it as deprevation of capital though not 100% sure!

JC9297

Why should the state be expected to provide you with an income while you use your redundancy payment to pay off debts? Surely the redudancy payment is meant to provide a financial cushion whilst you attempt to secure alternative employment. You would have to declare any payment and I should imagine that £36K would be expected to last quite a long time when assessing income based benefit.

briona

dkingdom wrote: »

We're downsizing our house/life as I'm sure I'll be made redundant in the next 2 years. I should get a good redundancy payment of around £36k as I've been with the firm nearly 20 years.

How have you worked out that you would get a 36K redundancy payment? Does your company have an enhanced redundancy package? The reason I ask is because statutory redundancy pay is capped at £380pw and a maximum of 20 years' service. You get 1 week's pay for every full year of service between the ages of 22 and 40, and 1.5 weeks' pay for every full year of service from the age of 41.

More info on the following link: http://www.berr.gov.uk/whatwedo/employment/employment-legislation/employment-guidance/page33157.html

Note also that redundancy pay is only tax free up to £30,000. Anything over that is taxable.

dkingdom wrote: »

What I want to know is how this may affect me seeking benefits if I can't find employment for a while and still have a mortgage of say £40k.

If I've paid my redundancy straight into my current account (virginone) it reduces the mortgage immediately and I still show a mortgage outstanding but "no savings" so presumably, they cannot say I have savings!? and I would qualify for income support?

Regardless of savings, you wouldn't qualify for income support as you don't meet the criteria, e.g., sick or disabled, a lone parent, a carer or registered blind. You would be able to claim contributions-based JSA for six months. This is NOT affected by any savings you have. After six months, if you were still unemployed you would have to apply for income-based JSA. As the name suggests your eligibility depends on what savings/capital you have. As the maximum allowable capital is 16K, I suspect that the 36K, regardless of where it was kept, would render you ineligible.

Briona

dkingdom

Yes you are right.

I have been paying in to "the state" for nearly 20 years, at a high rate....I was "naively" expecting "the state" could support me "short term" while i look for the next job.

dkingdom

Thanks Briona.

I'm pleased to discover that the 1st 6mths of unemployment is not savings dependent. I would not plan to be out of work for that long, and would look at all sorts of jobs.

I guess my company does have an enhanced redundancy scheme, it's 3 wks for every year of service and I've been there for 18yrs and it's capped at 36k. I'm also aware part of this would be taxed.

karenx

dkingdom wrote: »

Yes you are right.

I have been paying in to "the state" for nearly 20 years, at a high rate....I was "naively" expecting "the state" could support me "short term" while i look for the next job.

but you have 36k in the bank, the state has to draw the line somewhere.