It can be extremely challenging when you are made redundant. After committing a huge part of your career to a company, it can leave you with a great deal of uncertainty about what the future holds, and how you can afford to pay your bills.
Your redundancy package can often impact whether you can claim Universal Credit once you leave your job. In the blog below, we’ve given a clear overview of everything you need to know about applying for benefits to keep yourself afloat.
Your redundancy pay
In the UK, you are typically only applicable for a redundancy package if you have worked at the organisation for at least two years.
In some cases, you might have negotiated a redundancy package when you first took the job. In other situations, you will be entitled to ‘statutory redundancy’, which means that your pay will depend on your length of service and age.
Statutory redundancy means that you will receive:
- Half a week’s pay for each full year that you were under 22 years old
- A full week’s pay for each year you were 22 or older, but younger than 41
- One and a half week’s pay for each year you were 41 or older
Your weekly pay is the average you earned per week over the 12 weeks before you received your redundancy notice.
Keep in mind that under the statutory redundancy conditions, your length of service at a company is limited to 20 years. You cannot be paid a redundancy package for any length of time longer than that.
How Redundancy Pay Impacts Universal Credit
It can be frightening and stressful to be made redundant unexpectedly. If you have significant financial responsibilities, such as looking after your children or paying off your mortgage, then it can be a real challenge. Finding a short-term way to get more money into your bank account, until you find a longer-term solution, is essential.
If you are unemployed, then Universal Credit is the ‘benefit’ that you are most likely to be applicable for. When you apply for it, you will be asked to include your income and assets (including savings) – and this will need to show any redundancy money that you have received. The details that you input will have an affect on the amount of money you are eligible for each month.
You will not be able to receive Universal Credit in the UK if you have savings of more than £16,000. This includes the savings of your partner, if you have one. If you have savings between £6,000 and £16,000, then this may reduce the amount of money you are entitled to, and if you have savings below £6,000, then it will have very little impact.
You are able to take on low-paid work while applying for Universal Credit, if you want to, but the amount you receive will reduce by 63p for every £1 that you earn (unless you have children, an illness or disability). In this instance, your Universal Credit will only reduce once you’ve earned £512 per month if you don’t receive housing support, and £292 if you do.
Alternative options to Universal Credit
Another benefit scheme that you may be able to apply for is the Job Seeker’s Allowance (JSA). This is open to you if you are currently unemployed or work less than 16 hours per week.
Many people opt for JSA if they have more than £16,000 in savings – because while this would make you ineligible for Universal Credit, you might still be able to access from Job Seeker’s Allowance.
The UK Government’s website states that you could be eligible for JSA if:
- you have been working within the last 2 to 3 years as an employee
- you have paid (or been credited with) Class 1 National Insurance contributions
- you work less than 16 hours per week
Keep in mind that if you have an illness or disability that stops you from working, you are not usually able to get Job Seeker’s Allowance.
As a third option, you may be able to apply for New Style Employment and Support Allowance if you have a disability of health condition that limits the amount that you can work. You will need to have made National Insurance contributions over the past 2-3 years to be applicable.
Considering all your options can help you to stop repossession of your property and continue meeting all your financial responsibilities.
Getting extra support with your mortgage
Paying off a mortgage is arguably the most significant financial burden that anyone faces in their life. When you are made redundant, your ability to keep meeting your monthly payments could be seriously hampered – and in this instance, it is important that you communicate clearly with your mortgage lender.
It is always better to explain the situation to your lender and enquire about a ‘Mortgage Holiday’ or a temporary period of smaller payments, while you get back on your feet. Burying your head in the sand is never a good idea and can cause more harm than good in the long-term.
Another way of easing your financial burden is to contact your council and find out if you are eligible for a reduction in council tax, or grants that help you to pay your bills. There are also some debt charities in the UK that support people who have been recently made redundant.
Get support from a Cash House Buyer
When you have been made redundant, you should consider all possible avenues for making your situation easier and improving your ability to pay your bills. Selling your house to a cash house buyer could offer a solution to your troubles.
A cash buyer like We Buy Any Home can purchase your property up-front for cash, within 7 days of you making your initial enquiry. This cash influx can help you to pay off your debts, and ‘keep your head above water’ for the foreseeable future.
We Buy Any Home is here to support you if you want to stop house repossession by getting a lump sum up-front that enables you to pay off all your debts. Contact us today for a free, no-obligation valuation.