YOUR Universal Credit payments could be reduced if you're paid redundancy money.
If your redundancy payment takes you over £16,000 in savings then your Universal Credit (UC) payment may be stopped entirely.
It comes as redundancy and unemployment rates hit record highs with job losses being reported across almost every industry.
According to the latest labour market overview released by the Office for National Statistics (ONS) this week, the number of redundancies reached a record high in September to November.
During these months alone, job losses increased by 168,000 since the last quarter and 280,000 since last year to a total of 395,000. Since February 2020, the number of payroll employees has fallen by 828,000.
The number of people claiming benefits has also increased by a whopping 113.2% or 1.4 million since March 2020 after it rose in December to a total of 2.6 million.
Some of these numbers will account for people who are in work but still eligible for benefits.
We explain how redundancy payments may affect Universal Credit.
How could a redundancy payment affect my Universal Credit
Any payments from redundancy will be treated as "capital", for example savings or investment, when it comes to claiming Universal Credit.
If you have more than £16,000 then your payments will stop entirely.
While anything between £6,000 and £16,000 is considered "income", regardless of whether it is or not.
If you're on Universal Credit then any income above a certain amount – known as the "work allowance" will affect how much you get in UC payments.
The work allowance is currently £512 if you don't get help with housing costs or £292 if you do.
Anything you earn over this is subject to the "taper rate", which means that for every £1 that you earn over the work allowance, 63p is deducted from your Universal Credit payment.
The Sun has been calling on the government to increase the work allowance and reduce the tape rate to 50p, so more hard-working Brits can get back to employment, as part of our “Make Universal Credit Work” campaign.
The Sun wants to Make Universal Credit Work
UNIVERSAL Credit replaces six benefits with a single monthly payment.
By the time the system is fully rolled out in 2023, nearly 7million will be on it.
But there are big problems with the flagship system – it takes five weeks to get the first payment and it could leave some families worse off by thousands of pounds a year.
And while working families can claim back up to 85% of their childcare costs, they must find the money to pay for childcare upfront – we’ve heard of families waiting up to six months for the money.
Working parents across the country told us they’ve been unable to take on more hours – or have even turned down better paid jobs or more hours because of the amount they get their benefits cut.
It’s time to Make Universal Credit work. Since December 2018, we've been calling for the government to:
- Get paid faster: The government must slash the time Brits wait for their first Universal Credit payments from five to two weeks, helping stop millions from being pushed into debt.
- Keep more of what you earn: The work allowance should be increased and the taper rate should be slashed from from 63p to 50p, helping at least 4million families.
- Don’t get punished for having a family: Parents should get the 85% of the money they can claim for childcare upfront instead of being paid in arrears.
Together, these changes will help Make Universal Credit Work.
Join our Universal Credit Facebook group or email [email protected] to share your story.
Why this could be bad for your savings
For someone who receives the minimum redundancy pay of £1,000 but already has £5,500 in savings, this will take them over the £6,000 and it will immediately reduce the amount of UC they can claim.
This could mean people are forced to dip more and more into their savings if the reduced UC payment doesn't cover all living costs on its own.
As a couple, your household income is assessed as one when it comes to UC, even if you’re not sharing it.
If a claimant and their partner have more than £16,000 in capital together then neither will be eligible for UC.
If they both have savings that add up to somewhere between £6,000 and £16,000, either of their UC claims will be reduced.
So if you both have £2,000 in savings and one person gets a £2,500 redundancy savings, that takes the total capital to £6,500 and your liable for UC reductions cumulatively.
You can report any changes in circumstances, including reductions incapital through your online Gov.UK account.
If you are not eligible for UC due to a redundancy payout of taking you over the £16,000 capital threshold, you may still be able to receive New Style Jobseeker’s Allowance or New Style Employment and Support Allowance.
Charities and campaign groups have called for the £6,000 threshold to be increaed.
Turn2Us spokesman Liam Evans said: "There has been an uptake in universal credit, partly to the huge redundancy numbers."
"But people are being denied support because their savings are being spent on surviving the pandemic.
"You could’ve saved £10,000 over 10 years but are now expected to spend that on living day-to-day and it won’t last for 6 months. Once this is over we’re going to be back to the situation where people will need their savings for the usual things."
"So we’re saying the current threshold limit is so low at £6,000.
"People might run out of money in a matter of months and end up depending fully on Universal Credit."
"The pandemic highlighted the precarity of the situation. We are urging the government to immediately review the capital threshold."
Kate Green, senior benefits expert at Citizens Advice said: “It can be incredibly worrying to find out you’ve been made redundant, but you don’t have to face things alone.
“If you’re still due to get any payments from work it’s a good idea to seek some independent advice before applying for benefits, as this may affect your entitlement.
“Citizens Advice can offer free support to help you navigate the next steps.”
How does Universal Credit work?
A Universal Credit claimant receives a monthly payment which is tailored to their circumstances.
It comes as a single payment that replaces 6 existing benefits and tax credits.
According to government guidelines, you can be eligible to claim a Universal Credit payment if:
- you’re on a low income or out of work
- you’re 18 or over (there are some exceptions if you’re 16 to 17)
- you’re under State Pension age (or your partner is)
- you and your partner have £16,000 or less in savings between you, and
- you live in the UK
If you are part of a couple, then both your earnings will be used to calculate your UC payment.
Generally, UC payments will be reduced the more a person earns.
You can apply for UC anytime on Gov.uk and use this benefits calculator to work out how much you may be eligible to claim.
What to do if you have problems claiming Universal Credit
IF you’re experiencing trouble applying for your Universal Credit, or the payments just don’t cover costs, here are your options:
- Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it's a loan which means the repayments will be automatically deducted from your future Universal Credit payout.
- Alternative Payment Arrangements – If you're falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you're part of a couple.
- Budgeting Advance – You may be able to get help from the Government for emergency household costs of up to £348 if you're single, £464 if you're part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You'll have to repay the advance through your regular Universal Credit payments. You'll still have to repay the loan, even if you stop claiming for Universal Credit.
- Cut your Council Tax – You might be able to get a discount on your Council Tax by applying for a Council Tax Reduction. Alternatively, you might be entitled to Discretionary Housing Payments to help cover your rent.
- Foodbanks – If you're really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussell Trust website.
Source: Read Full Article