Benefits and Redundancy pay out

united4ever

Hi, I am on Garden Leave on full pay until May 31st. June 1st I am unemployed. June 28th I should get redundancy payout around 35k.

I gather the 35k is treated as capital then so because it is more than 16k I will get substantially less in benefits. Is that right?

I will be applying for JSA really to kick in on June 1st when my capital will be just 2kish. I believe on that basis I will get about (£346 a week based on calculator) but then once the redundancy payment occurs on June 28th I should be back down to about £122 a week. Does this sound right? And then over the year my capital will probably dwindle eventually down to below 16k, and eventually below 6k so I just have to keep updating the government regarding these changes to my capital?

Obviously, I hope to get a job but just trying to understand what I would be looking at financially.

Finally, to apply for UC or JSA do I need to start the application before 1st June (first day I will be unemployed)?

I have been working for last 19 years so will meet criteria for JSA.

Spoonie_Turtle

JSA is not means-tested, it's £84.80 per week.

If your figures included UC then as soon as your savings go above £16,000 all UC would stop.  Once it drops below £16,000 you can reclaim, and there will be a deduction of £4.35 per month for each £250 (or part £250) over £6,000.

Which day to apply for JSA, I'm not sure - others here will know. 

If you were to apply for UC before your redundancy pay you'd need to apply at least 1 calendar month before it, otherwise it would be counted in your first assessment period and you would get no UC.  But depending on your current wages and circumstances there may be no UC entitlement anyway - you should do a benefit calculation putting in your details as they are now, to see.

TELLIT01

Apply for JSA in mid May would be my advice then you are in the system before your actual employment end date.  Do not leave it until after employment ends as backdating is generally not permitted.

HillStreetBlues

I don't think you can claim JSA in advance, but stand to be corrected.
You will need to wait till 1st June before you apply.

HillStreetBlues

Are you single or part of a couple, do you have to pay rent?

united4ever

HillStreetBlues said:

Are you single or part of a couple, do you have to pay rent?

married, wife works part time (about £500 a month), two kids (13 and 10), paying a mortgage.

HillStreetBlues

With a mortgage, you are allowed to pay any redundancy money towards that to bring below  UC capital limit.

But any UC claim would be joint and your wife earnings taken into account, so would have to check UC entitlement first.

united4ever

HillStreetBlues said:

With a mortgage, you are allowed to pay any redundancy money towards that to bring below  UC capital limit.

That seems like a no brainer then. Thanks very much. Will have to look at the overpayment criteria on my mortgage but haven't been overpaying for last few years and fixed term ends in Feb 2024.

Spoonie_Turtle

united4ever said:

HillStreetBlues said:

With a mortgage, you are allowed to pay any redundancy money towards that to bring below  UC capital limit.

That seems like a no brainer then. Thanks very much. Will have to look at the overpayment criteria on my mortgage but haven't been overpaying for last few years and fixed term ends in Feb 2024.

Just want to highlight this part of the post

HillStreetBlues said:

But any UC claim would be joint and your wife earnings taken into account, so would have to check UC entitlement first.

Just to make sure.

Though with the higher work allowance of £631 because you have children and won't be claiming help for rent, your wife's earnings will be completely ignored.  Your only deductions would be the JSA (when you claim) and for any savings above £6,000.

united4ever

£631 is a threshold then? If wife earns more than that we would receive less? My wife is on a contract and is negotiating the next one so this is relevant.

About the mortgage, logged on to NatWest and seems like I can overpay 20% in a lump sum per year with no early repayment charge. 

Balance left is £101886 so could pay £20500 with no ERC and that would probably take my capital just below 16k. 

If I overpay beyond 20% ERC is only 1% on the amount over 20%. So lump sum overpayment of 35k would only incur about £150 in ERC and take my capital below 6k and making me eligible for the full benefits. This would make the mortgage much lower each month and probably help us to manage due to increased benefits.

Do correct me if there is a flaw in my logic here.

HillStreetBlues

Will only comment on the mortgage

If you get your saving down to £16k  there is a deduction of £4.35 per £250 (or part of) over £6k
So as you would be about £10k over £6k that deduction would be £174 pm

So even if you paid £150 overpayment charge  you would still be better off in the first month by £24, and £174 every month after.