Being made redundant and want to know if I can claim new style JSA

jamescl

Hi there, 

I'm being made redundant and I've been with the company for a very long time, the redundancy payment would clear any debts and mortgage and leave me with 6k.

I'm looking to get back into work soon, not to sponge off the taxpayer but I have paid into the system significant sums for decades. I've been told in the redundancy forum here that if I were to pay my mortgage and debts off entirely in a lump sum that I wouldn't be eligible to claim universal credit as it is a means tested benefit and paying debts off voluntarily in full would be considered deprivation of assets and therefore any claim would likely be rejected. 

However new style JSA isn't a means tested benefit, would I be right in thinking that I could potentially claim this? albeit only for 6 months as it seems to expire after that. I'm really not sure whether to keep paying my loan and mortgage in bits each month and incur a lot more interest or whether to pay them off, leave 6k, claim JSA and try to get back to work soon, it sounds like paying off debts is a better plan, but I'm looking for advice. 

Thanks in advance. 

calcotti

jamescl said:

 I've been told in the redundancy forum here that if I were to pay my mortgage and debts off entirely in a lump sum that I wouldn't be eligible to claim universal credit as it is a means tested benefit and paying debts off voluntarily in full would be considered deprivation of assets and therefore any claim would likely be rejected. 

That is incorrect. Paying off debt is specifically excluded from being treated as deprivation of capital under UC legislation.

Capital below £6000 is ignored. Between £6,000 and £16,000 there is a deduction of £4.35/month for every £250, or part thereof, over £6,000. If £16,000 or overyou are excluded from claiming UC.

You can as you say claim JSA, capital (no matter how much) has no impact on JSA entitlement.

jamescl

calcotti said:

jamescl said:

 I've been told in the redundancy forum here that if I were to pay my mortgage and debts off entirely in a lump sum that I wouldn't be eligible to claim universal credit as it is a means tested benefit and paying debts off voluntarily in full would be considered deprivation of assets and therefore any claim would likely be rejected. 

That is incorrect. Paying off debt is specifically excluded from being treated as deprivation of capital under UC legislation.

I read into it and it seems to only apply when the debt becomes due, not clearing debt by making a lump sum payment. I'd welcome input from anyone here who knows for certain though, this benefits forum is a good place to ask I'm sure. 

calcotti

jamescl said:

calcotti said:

jamescl said:

 I've been told in the redundancy forum here that if I were to pay my mortgage and debts off entirely in a lump sum that I wouldn't be eligible to claim universal credit as it is a means tested benefit and paying debts off voluntarily in full would be considered deprivation of assets and therefore any claim would likely be rejected. 

That is incorrect. Paying off debt is specifically excluded from being treated as deprivation of capital under UC legislation.

I read into it and it seems to only apply when the debt becomes due, not clearing debt by making a lump sum payment. I'd welcome input from anyone here who knows for certain though, this benefits forum is a good place to ask I'm sure. 

That is incorrect. The rule you are referring to is for legacy benefits. The law on UC is different. See the regulation I have quoted.
Universal Credit Regulations 2013 regulation 50 (2)
https://www.legislation.gov.uk/uksi/2013/376/regulation/50/made

Notional capital
50.—(1) A person is to be treated as possessing capital of which the person has deprived themselves for the purpose of securing entitlement to universal credit or to an increased amount of universal credit.
(2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a) reducing or paying a debt owed by the person; or
(b) purchasing goods or services if the expenditure was reasonable in the circumstances of the person's case.
(3) ...

jamescl

In that case that's great, i'd rather save the interest by settling my debts and not be on benefits for very long and get back to work. 

The online calculator says: - 
Universal credit  £35.51
Contributory ESA/JSA £322.18
Total £ 357.69 per month

Does that sound right, I do have the necessary national insurance payments. I wonder if ESA and or JSA are affected by paying off debts prior to claiming?

That £ 357.69 would allow me to have  food, gas, electric, water, internet and council tax while I'm job hunting. 

calcotti

jamescl said:

In that case that's great, i'd rather save the interest by settling my debts and not be on benefits for very long and get back to work. 

The online calculator says: - 
Universal credit  £35.51
Contributory ESA/JSA £322.18
Total £ 357.69 per month

Does that sound right, I do have the necessary national insurance payments. I wonder if ESA and or JSA are affected by paying off debts prior to claiming?

That £ 357.69 would allow me to have  food, gas, electric, water, internet and council tax while I'm job hunting. 

The total will be the same if you claim just UC as JSA is deducted in full from UC entitlement.

However I don’t recognise the £357.69. What have you taken as your remaining capital? How old are you? UC standard allowance for a single person is £409.89 for someone 25 years or over, £342.72 for someone under 25. I assume from the number you have arrived at that you do not live with a partner or have children.

What your calculation shows however is that as a single claimant you would get most of your benefit income from JSA. Whether it is right for you in the long term to surrender your capital for the modest amount of UC you would get for just a few months (assuming you manage to find work soon) only you can decide.

As previously stated JSA is not affected by capital. ESA is irrelevant unless you have a health problem which limits your ability to work.

i would suggest claiming JSA now while you decide whether or not to pay off debt. You can then claim UC later if you decide to,

jamescl

The  £357.69 came from an online calculator website, but might be wrong. I think you've answered the main points of concern and given me the options to consider. I really appreciate your help. 

calcotti

Although it’s logical to pay down debt which is costing you more than any interest you earn on the savings don’t underestimate the psychological value of having a savings safety net to deal with unexpected events like a boiler breakdown etc.

if you do decide to claim Universal Credit you will probably also be able to claim Council Tax Reduction from your local authority.