Reductions of UC from redundancy and notice pay

stueyhaigh1974

I was made redundant on the 26th Oct this year through fault of the pandemic. The company went into liquidation. I've worked there for 13years. I've got 12 weeks notice pay totally just over £6k but can't claim until 18th Jan. Also in around 5 weeks time I'm owed close to £8k in redundancy. At the same time I'm now having to start claiming for UC which I applied for the day after I was paid my last wage. Now obviously I will receive my redundancy before my first UC payment. Will my UC have been worked out before I get my redundancy, thus not affecting my first UC payment? Also would the money in my account be a drawback for just the 1 month I received it, or will there be a reduction in my UC every month the money is in my account. Also when I get my notice pay in Jan, will it affect my UC payment again for 1 month or ongoing as long as the money is there? Please advise me.

tacpot12

The UC system can only calculate the amount of your payment based on the information it has. My understanding is that if your redundancy money hasn't been paid to you, the UC system cannot take this amount into account. 

The redundancy money (£8K) will reduce your UC amount every month that you have it saved anywhere - it doesn't have to remain in your current account for it to affect your UC payment. You are allowed to have a total of £6K in savings before your UC amount starts to reduce, and you are allowed to use the money to clear any debts if it is reasonable to do so. If you have any savings currently these will be added to the redundancy payment in calculating the total of your savings. (It's your responsibility to make sure the DWP know about all your savings wherever they are held).

The situation with your notice pay is slightly different. Your notice pay will be treated as income (whereas the redundancy pay is not treated as income). Income of £6K+ in one assessment period is going to mean that your UC payment will be zero for that period. Once the money has landed in your account is becomes capital, and subject to the same rules as the redundancy money.  Once your savings rise about £16K you cannot claim UC at all. 

Is there a reason why you are not claiming JSA? 
Do you rent your home? 

poppy12345

The notice pay may also affect more than just 1 month UC because of the surplus earnings rule. Although this link says self employed, the surplus earnings rule is the same for PAYE as well. https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/surplus-earnings-and-losses/

stueyhaigh1974

Thanks for the advice. Most of what you said is as I thought. It's all so wrong. You work for a company for 13 years and made redundant because of something that is out of any ones control. You need that money, and you've earned it! Yet you can't have it. I understand I can use it to pay off debts ( which I have lots) but it just doesn't lay well. Sorry for ranting on. I'm not claiming JSA as I understood, if I claim UC it's taken of  £per£. I don't see the point. I don't intend (hopefully) be redundant for too long. Am I missing the point? Please advise. Oh and yes I'm renting ( living with my partner and 3 kids.)

poppy12345

Universal Credit is a means tested benefit so yes it's correct that earnings/savings/capital affect the amount you're entitled to.

New style JSA isn't means tested, so income/savings/capital do not affect it. It pays £74.35 (over 25) per week for 26 weeks.

tacpot12

Because you can claim UC for help with your rent (plus the child element), your savings are taken into account so there is no point claiming JSA. If you had no children, and owned you own home, it would be better to claim JSA, as it would ignore your savings (and your partner's income).

Have you tried the benefit calculators at entitledto.co.uk or turn2us.org.uk? You should do so to ensure you understand what you will lose from UC as a result of receiving these payments. It isn't likely to be that much, you might be surprised. I think you might need to factor in the surplus earnings rule as the calculators are pretty functional, but they can't do everything that the UC system has to do. 

You might also find out that you will be subject to the benefit cap, which was introduced to stop people on benefits having a higher income than someone who was working in a well paying job - there was a question on MSE from someone earning about £40K pa who couldn't believe that their income on benefits was going to very similar to what they were earning.