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Redundancy Payment And Jsa
11 Answers
My neighbour had just been given three months redundancy notice. He’s been at the company over 20 years and is expecting in excess of £18k. Would he be able to make a £12k reduction on his mortgage in order to receive full JSA or UC
Many thanks in anticipation to all who answer
Many thanks in anticipation to all who answer
Answers
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New style JSA which last for six months isn't means tested so is not affected. When that ends, however, he may go on to claim Universal Credit, which is means tested. Capital has to be declared in the application process.
It's possible that he could be asked at that stage what happened to the redundancy payment, and then a Decision Maker would look at it. This is from the Decision Makers' Guide rule 29834
"1 R(SB) 12/91 29834 Claimants or partners have a choice if they
1. give their capital away
2. spend their capital extravagantly or imprudently even if they say they have used it to pay for the necessities of life
3. pay back a debt before the agreed date, such as when they pay off their mortgage and the agreement says it is not due to be paid back for another 15 years
4. pay more than the amount due on a debt, such as when they pay more than the minimum payment on a credit card debt, unless the payment has been made to remove the threat of high interest payments and the DM decides it was reasonable for the claimant to act in the way that they did.
5. pay back a debt which is not a legal debt capable of enforcement.
6. make payments to a flexible current account mortgage which reduce the outstanding balance on the mortgage."
It's possible that he could be asked at that stage what happened to the redundancy payment, and then a Decision Maker would look at it. This is from the Decision Makers' Guide rule 29834
"1 R(SB) 12/91 29834 Claimants or partners have a choice if they
1. give their capital away
2. spend their capital extravagantly or imprudently even if they say they have used it to pay for the necessities of life
3. pay back a debt before the agreed date, such as when they pay off their mortgage and the agreement says it is not due to be paid back for another 15 years
4. pay more than the amount due on a debt, such as when they pay more than the minimum payment on a credit card debt, unless the payment has been made to remove the threat of high interest payments and the DM decides it was reasonable for the claimant to act in the way that they did.
5. pay back a debt which is not a legal debt capable of enforcement.
6. make payments to a flexible current account mortgage which reduce the outstanding balance on the mortgage."
Yes for JSA. UC a little more difficult. There's a thing called presumed capital. That is how much you had before you paid things and the max capital for UC is £14,000. That said, you're not having a cruise and you're paying a debt. Gov. uk doesn't go into all the details so have a look and then give them a ring. But don't say you're doing this in order to obtain benefits.
The rules for deprivation of capital and Universal Credit (UC) are different from the former income-related benefits.
With the former benefits, using capital to reduce an outstanding mortgage amount would have been deprivation as there was no need to pay it earlier than required. That is why the quoted extract from the Decision Makers Guide quotes tbe example of the 15 year mortgage from Commissioner's Decision.
The rules for UC are different and using capital to pay off or toward a debt is allowed. The guidance for UC Decision Makers (Advice for Decision Making) states,
“H1833 Claimants or partners have no choice if they use their capital to pay
1. for the necessities of life, such as food and fuel or
2. debts or
3. the Department to repay an overpayment.
Claimants or partners who had no choice have not deprived themselves of capital to get UC or more UC.”
Reg 50(2) of The Universal Credit Regulations 2013 states,
“Notional capital
50 (2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a) reducing or paying a debt owed by the person; or
(b) purchasing goods or services if the expenditure was reasonable in the circumstances of the person’s case.”
With the former benefits, using capital to reduce an outstanding mortgage amount would have been deprivation as there was no need to pay it earlier than required. That is why the quoted extract from the Decision Makers Guide quotes tbe example of the 15 year mortgage from Commissioner's Decision.
The rules for UC are different and using capital to pay off or toward a debt is allowed. The guidance for UC Decision Makers (Advice for Decision Making) states,
“H1833 Claimants or partners have no choice if they use their capital to pay
1. for the necessities of life, such as food and fuel or
2. debts or
3. the Department to repay an overpayment.
Claimants or partners who had no choice have not deprived themselves of capital to get UC or more UC.”
Reg 50(2) of The Universal Credit Regulations 2013 states,
“Notional capital
50 (2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a) reducing or paying a debt owed by the person; or
(b) purchasing goods or services if the expenditure was reasonable in the circumstances of the person’s case.”
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