Benefits, redundancy, debt?

BeBetter

Hi, I found this site after trying to search on the internet for information about our situation.

My husband has been told he's to be made redundant. He's lucky in that he's got a new job to start straight away so he'll not be unemployed or have to claim benefits at this point.

The new job has a 6 week trial period and DH will be treated as a self employed contractor during this time, he will have to register as self employed and pay his own tax and insurance. If the trial goes ok, he'll then be officially taken on as a company employee. If the trial doesn't go well, he'll be let go.

We have some debt that we want to clear with his redundancy money. He won't be getting paid as much as he did in his old job but we'd manage if we didn't have debt to pay as well.

If we do this and the trial doesn't work out, what would be the situation about benefits? We'd have to claim benefits until he found more work, I don't have a job right now either. Would it be a problem if we'd used the redundancy money for the debt? Or would that not matter since he'd been working again after he'd got it?

No-one's expecting the trial to not work out, I just want to be sure about things just in case.

midnight_express

How much is the redundancy money and how much is the debt ? Which benefitS would he be claiming ? Capital doesn't effect JSA CONTS.

BeBetter

The redundancy money is £14000 and the debt is just over £13000.

He'd be claiming Income Support.

But does any of that matter if he'd be working again after he got the redundancy? Wouldn't the redundancy be irrelevant to the DSS then? Surely if he was working he'd be entitled to spend the redundancy money from his previous job if he wanted?

I've read things that seem to conflict each other, it's very confusing.

Thanks for replying.

pmlindyloo

Since your OH has a job to go to then he can clear the debts with his redundancy money.

The so called 'deprivation of capital' is when someone uses capital in order to claim benefits.

In your OH's case this isn't what he is doing.

Even if the new job doesn't work out then he will still be entitled to contribution based JSA for 6 months. Contribution based JSA (based on previous NI contributions) is non means tested so any savins or the 'deprivation of capital' does not apply.

I am not sure why you believe he would be claiming Income Support. Income Support has very strict criteria - usually for single parents with a child under 5 years or a 'top up' benefit.

Any income based benefits (which Income Support is) may consider paying off debts which are not immediately payable) as deprivation of capital.

If you do not pay off the debts then you can use the redundancy money to service the debts/living expenses while your husband claims contribution based JSA.

Always a difficult one because many people see redundancy money as a 'bonus' and want to use it to pay off debts/go on holiday etc but the truth is that for means tested benefits purposes it is seen as savings/capital and you are expected to use it to live rather than rely on the benefit system.

bloolagoon

pmlindyloo wrote: »

Since your OH has a job to go to then he can clear the debts with his redundancy money.

The so called 'deprivation of capital' is when someone uses capital in order to claim benefits.

In your OH's case this isn't what he is doing.

Even if the new job doesn't work out then he will still be entitled to contribution based JSA for 6 months. Contribution based JSA (based on previous NI contributions) is non means tested so any savins or the 'deprivation of capital' does not apply.

I am not sure why you believe he would be claiming Income Support. Income Support has very strict criteria - usually for single parents with a child under 5 years or a 'top up' benefit.

Any income based benefits (which Income Support is) may consider paying off debts which are not immediately payable) as deprivation of capital.

If you do not pay off the debts then you can use the redundancy money to service the debts/living expenses while your husband claims contribution based JSA.

Always a difficult one because many people see redundancy money as a 'bonus' and want to use it to pay off debts/go on holiday etc but the truth is that for means tested benefits purposes it is seen as savings/capital and you are expected to use it to live rather than rely on the benefit system.

He is not going into employment, he is starting self employment, are you saying that if people start a business then Depravation of Capital does not apply?

BeBetter

I am not sure why you believe he would be claiming Income Support. Income Support has very strict criteria - usually for single parents with a child under 5 years or a 'top up' benefit.

I got that wrong then, sorry. He's worked all his life, we don't know much about benefits. I thought Income Support was what people with families claimed if they lost their job.

Errata

In your shoes I'd be leaving the redundancy money in the bank until he's employed - a six week wait is neither here nor there.

BeBetter

In your shoes I'd be leaving the redundancy money in the bank until he's employed - a six week wait is neither here nor there.

Why? Do you mean because of a possible benefit situation? That's why I'm trying to find out the facts first. It would be a worry off our shoulders if we could just wipe the slate clean now.

pmlindyloo

bloolagoon wrote: »

He is not going into employment, he is starting self employment, are you saying that if people start a business then Depravation of Capital does not apply?

Deprivation of capital is a term used as regards claiming benefits.

When/if you claim income based benefits then they would look at your bank statements etc and see that you had the redundancy money. Paying back debts which are not immediately due is seen as deprivation of capital and they would not allow you to claim income based benefits.

In your OH's case he could claim contribution based JSA and this money would not be taken into account as does not take any savings into account.

However, you would have to survive on the contribution based JSA which wouldn't be sufficient for your needs.

Do you have children and are you claiming tax credits?

BeBetter

Do you have children and are you claiming tax credits?

Yes, and we don't get tax credits since the Government changes as our income was too high. We get Child Benefit.

So we could clear the debt if he only claimed JSA but not if he tried to claim anything else?

Is this just because he's on a trial? Would it be different if he was employed by the company straight away?

pmlindyloo

BeBetter wrote: »

Do you have children and are you claiming tax credits?

Yes, and we don't get tax credits since the Government changes as our income was too high. We get Child Benefit.

So we could clear the debt if he only claimed JSA but not if he tried to claim anything else?

Is this just because he's on a trial? Would it be different if he was employed by the company straight away?

Either I'm confused or you're confused

It has nothing to do with his being on trial or if he was employed because he wouldn't be claiming benefits then.

This deprivation of capital comes into force if he claimed benefits.

While he's self employed/employed he won't be claiming Job Seekers Allowance.

After the 6 week trial then if he has no job then he would have to claim benefits and they would look at the deprivation of capital issue.

If he continues in employment - whether self employment or being employed- then you can spend the money how you like.

(By the way, if he will be earning less and/or goes onto contribution based JSA then you should apply for tax credits.)