Universal credit and redundancy

Twinmom1981

Hi I have searched for advice on our situation but can’t find anything similar so posting here for advice.
My husband and I already have a joint UC claim, he works full time and I don’t currently work so it tops up his wages. In the next few months he is being made redundant after 21 years service and is expecting statutory redundancy pay only (gov calculator suggests around a 9k payment). How does this affect our UC? Is it classed as income so we won’t receive anything until we have used it to live off? (Unless a new employment is found quickly) or is it classed as savings? If it’s classed as savings do we update them on when the amount lowers?

thanks in advance for any advice x

calcotti

A non taxable redundancy payment is excluded from being treated as earnings and is treated as capital
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/767105/admh3.pdf

“Termination of employment payments

H3119 There is a limited tax liability for payments made by an employer in respect of redundancy1. A redundancy payment is excluded from the meaning of earnings for the purposes of UC and falls to be treated as capital in the assessment period in which it is received. ADM Chapter H1 provides guidance on capital.

1 Income Tax (Earnings and Pensions) Act 2003, Part 4, Chapter 10”

Any payment for holiday owed earlier etc. will still be earnings.

He should advise UC that he is being made redundant and tell them when he receives the payment. Keep DWP updated just before the end of each assessment period about the amount of capital remaining - they may need bank statements etc.

Capital below £6,000 is ignored. Above this there is a reduction of £4.35/month for every £250 or part thereof so (if you have no capital prior to this) for a payment of £9,000 there would be a UC reduction of £52.20/month. If you have debts you can use money to pay off debts.