To be paid money in lieu of notice means 'instead of notice'. Therefore your final day of employment will be earlier - probably the last day you work there (but not necessarily - depends on stuff since as holiday entitlement left etc). Company should send you a letter setting all this out. They should pay you the money gross, without deduction of NI or PAYE tax. However since you are being paid for your notice period, you won't be able to register a claim for JSA until the end of that notice period.