UC query after only £1.50 received today.

elsien

She has given up her job due to ill health. It is no more complicated than that - no pensions, no redundancy, just not able to carry on. Her employer has given her a thank you bonus - I don't know whether the rules would count that as income or capital but I can see why they might have made that income decision. And the duff info might have been because she was calling it a redundancy payment when it isn't.

HillStreetBlues

geewcee said:

HillStreetBlues said:

geewcee said:

Thankyou, I rang her back and let her know. She's dyslexic and didnt realise you could go into the Payments section on there as she doesnt like to mess with things she knows nothing about. I got her to read to me what this months statement said and it said that they classed the redundancy payment as wages so it has reduced her UC to £1.53 this month. But she read her journal entries where two separate people told her that it would not affect it so told her to screenshot those for her phonecall tomorrow. Whole thing stresses her out terribly, and I really appreciate your help this evening to all that replied. 

There are people with far better knowledge than me, but I believe that incorrect.
Redundancy is classed as capital not income.

  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.

https://assets.publishing.service.gov.uk/media/6717bc20a71f39bdb1c9c18a/adm-chapter-h3-earned-income-employed-earnings.pdf

Hopefully someone will correct me if wrong, or confirm it's correct.

This is exactly what she has been told previously by 3 different people working for UC, but they have now noted down her redundancy as wages. I'm hoping she will speak to someone tomorrow who actually knows the rules.

The issue I think rereading the thread is what was the payment classed as reported by employer.

8dayweek

It sounds like the final payment from the employer was PILON / outstanding annual leave / bonus… all of which is taxable earnings and treated as such by UC. It doesn’t sound like she’s received a lump sum redundancy payment. 

The issue is actually if this is being counted “twice” as in once as Earnings and once as Capital - given it appears she immediately reported it as Capital. 

I think you need to compare her UC statement with her final wage slip - and see if they match exactly or partially. If they do, her Capital / Savings need to be updated to omit what she’s received as it’s not yet Capital. If they don’t, it’ll be a case of partially updating the Capital to only include the part that’s not Earnings. 

sammyjammy

elsien said:

She has given up her job due to ill health. It is no more complicated than that - no pensions, no redundancy, just not able to carry on. Her employer has given her a thank you bonus - I don't know whether the rules would count that as income or capital but I can see why they might have made that income decision. And the duff info might have been because she was calling it a redundancy payment when it isn't.

They've treated it as income because it would have been reported via RTI from employer so the trip to the jobcentre was unnecessary really.

sammyjammy

8dayweek said:

It sounds like the final payment from the employer was PILON / outstanding annual leave / bonus… all of which is taxable earnings and treated as such by UC. It doesn’t sound like she’s received a lump sum redundancy payment. 

The issue is actually if this is being counted “twice” as in once as Earnings and once as Capital - given it appears she immediately reported it as Capital. 

I think you need to compare her UC statement with her final wage slip - and see if they match exactly or partially. If they do, her Capital / Savings need to be updated to omit what she’s received as it’s not yet Capital. If they don’t, it’ll be a case of partially updating the Capital to only include the part that’s not Earnings. 

I know we've not seen the numbers but if paying rent etc for this month wipes out the sum then even reported as capital as well it wouldn't impact her UC.

8dayweek

sammyjammy said:

8dayweek said:

It sounds like the final payment from the employer was PILON / outstanding annual leave / bonus… all of which is taxable earnings and treated as such by UC. It doesn’t sound like she’s received a lump sum redundancy payment. 

The issue is actually if this is being counted “twice” as in once as Earnings and once as Capital - given it appears she immediately reported it as Capital. 

I think you need to compare her UC statement with her final wage slip - and see if they match exactly or partially. If they do, her Capital / Savings need to be updated to omit what she’s received as it’s not yet Capital. If they don’t, it’ll be a case of partially updating the Capital to only include the part that’s not Earnings. 

I know we've not seen the numbers but if paying rent etc for this month wipes out the sum then even reported as capital as well it wouldn't impact her UC.

Yes very good point. I think starting point is compare Wage Slip to “take-home pay” on the UC statement and then we can advise further on the nuances. 

geewcee

Update: My sister had a 40 minute conversation with a nice lady at UC, who explained everything in great detail to her. It seems her employer put the redundancy payment through as wages via HMRC so that is how it is reported to UC. Therefore she is only left with £1.53 after deductions from that salary. Because she wont be receiving a salary next month her UC will be paid as normal which has put her mind at rest. However later on, she received a reply via her journal that disputes this, and he has said he will investigate this with her employer as he thinks they made an error putting the full amount through as wages and not splitting it.

Anyway the main thing is that she will still get her payment next month, and as this was her major worry then it seems to me as the whole thing is resolved.
Thanks for all your help, especially
@Spoonie_Turtle who provided the screenshot that got the ball rolling for her. 

elsien

Except it’s not a redundancy payment……

pleased that she is reassured for next month though. 

geewcee

elsien said:

Except it’s not a redundancy payment……

pleased that she is reassured for next month though. 

I can only go on what she told me, they laid her off on medical grounds, if that's not redundancy what is it? The company came to her house and went through everything and the way they worded it was they were making her redundant, she got a bonus payment on top of just over £150. 
I wont be adding anymore info after this, as far as I am concerned its resolved.

elsien

Redundancy is when the employer is reducing the workforce and getting rid of the job itself. 

So if they terminate her employment on health/capability grounds then employ someone else to do it, the job is still there and no/one has been made redundant. 

If it’s sorted and makes no difference then it’s academic but as there is a dispute, if the employer comes back to say that no, it was wages and notice, your sister may need to understand that.