Redundancy payment and universal credit

bennyali

Hi All. 

Just looking for some advice. I have been employed with my company for 25 years. I’m being made redundant. My payment is over the benefits threshold I know that but what I want to know is am I allowed to pay my mortgage or debts with my redundancy payment and claim any benefits? I won’t be able to pay most of these on just my benefits. Mostly I’d like to pay my mortgage off but M I allowed to do that as it will wipe out my redundancy payment or will that be a cause for me to not be able to claim benefits?

Thanks in advance. 

KatrinaWaves

For universal credit that is allowed. If you were looking at claiming legacy benefits like JSA they wouldn’t allow it. 

poppy12345

KatrinaWaves said:

For universal credit that is allowed. If you were looking at claiming legacy benefits like JSA they wouldn’t allow it. 

That doesn't apply here because the OP is already claiming UC. The only JSA that's possible to claim now (unless someone is claiming the SDP in another benefit) is New style JSA and this isn't means tested.

poppy12345

The redunancy will affect the amount of UC you can claim in the month it's received and will reduce your UC. Surplus earnings could be very likely if it's a large amount of money so it could affect more than 1 months UC but it will depend on your maximum UC entitement and how much redunancy you receive. See link and scroll down to surplus earnings. https://www.gov.uk/universal-credit/how-your-earnings-affect-your-payments

calcotti

poppy12345 said:

The redunancy will affect the amount of UC you can claim in the month it's received and will reduce your UC. Surplus earnings could be very likely if it's a large amount of money so it could affect more than 1 months UC but it will depend on your maximum UC entitement and how much redunancy you receive. See link and scroll down to surplus earnings. https://www.gov.uk/universal-credit/how-your-earnings-affect-your-payments

Note that actual redundancy payments are treated as capital, not earnings 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/893721/admh3.pdf

Termination of employment payments

H3119 There is a limited tax liability for payments made by an employer in respect of redundancy. 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.

Final pay, holiday pay etc are treated as earnings in the normal way.

daveyjp

OP.  JSA may be a better alternative.  

KatrinaWaves

poppy12345 said:

KatrinaWaves said:

For universal credit that is allowed. If you were looking at claiming legacy benefits like JSA they wouldn’t allow it. 

That doesn't apply here because the OP is already claiming UC. The only JSA that's possible to claim now (unless someone is claiming the SDP in another benefit) is New style JSA and this isn't means tested.

Sorry I missed that bit, it doesn’t appear to state he is claiming UC in this post. Is it on another thread? 

poppy12345

KatrinaWaves said:

poppy12345 said:

KatrinaWaves said:

For universal credit that is allowed. If you were looking at claiming legacy benefits like JSA they wouldn’t allow it. 

That doesn't apply here because the OP is already claiming UC. The only JSA that's possible to claim now (unless someone is claiming the SDP in another benefit) is New style JSA and this isn't means tested.

it doesn’t appear to state he is claiming UC in this post. Is it on another thread? 

It's in the title of the thread.

bennyali

Apologies. I’m not claiming yet, the title is a bit ambiguous to the fact, sorry.  I’m in the process of being made redundant and that’s my worry is I want to pay my mortgage off because it’s my biggest outgoing and universal credit when I claim will leave me with absolutely nothing. I’m just worried if I pay my mortgage off then they will deny me universal credit as I got a big redundancy payment and I don’t know if it’s allowed to pay things off with that so I don’t fall behind. 

calcotti

bennyali said: I’m just worried if I pay my mortgage off then they will deny me universal credit as I got a big redundancy payment and I don’t know if it’s allowed to pay things off with that so I don’t fall behind. 

As advised earlier paying off debt is not deprivation of capital.
https://www.legislation.gov.uk/uksi/2013/376/regulation/50

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.

daveyjp

Its a terrible situation and easy to make a panic decision, but I wouldn't jump too early.  

JSA is for 6 months so you can take advantage of that payment and pay the monthly mortgage from the redundancy.

If after 6 months you don't have employment you can reconsider your options.