How does redundancy pay affect Universal Credit?

How Universal Credit treats each payment

When you leave a job because of redundancy, you may get several payments at once. Universal Credit does not treat them all the same way.

Earnings reduce your Universal Credit in the month they are paid, so a large final pay packet can mean you get no Universal Credit that month. Savings work differently: they affect you for as long as you still have the money. If you are not sure how another payment from your employer will be counted, ask DWP when you claim.

The savings limits

Universal Credit looks at all your money, savings and investments, including redundancy pay you have not spent.

If you claim as a couple, both of your savings are added together.

Worked examples

Example 1. You get £8,000 redundancy pay and already had £2,000 saved. That is £10,000 in total. This is £4,000 over £6,000. £4,000 divided by £250 is 16. 16 x £4.35 = £69.60 a month less Universal Credit.

Example 2. You get £18,000 redundancy pay. Your savings are over £16,000, so you cannot get Universal Credit yet. If your savings later fall to £16,000 or less, you can claim.

New Style Jobseeker's Allowance

You may also be able to get New Style JSA. It depends on your National Insurance record, not your savings.

• You usually need to have paid Class 1 National Insurance in the last 2 to 3 years as an employee.
• Your savings and your partner's savings do not affect it.
• It is paid for up to 182 days.
• You can claim it with, or instead of, Universal Credit. If you get both, New Style JSA counts as income for Universal Credit.
• Payments from a pension can affect how much New Style JSA you get.

Things to know

• If your employer is insolvent, the Insolvency Service may pay your redundancy pay and notice pay. When it works out your notice pay, it takes off benefits you could have got during your notice period, even if you did not claim them. So it is worth applying for Universal Credit or New Style JSA straight away.
• Northern Ireland runs its own Universal Credit system. Check nidirect if you live there.

Related guides

• How much statutory redundancy pay will I get?
• How do savings affect Universal Credit?
• Do you pay tax on redundancy pay?
• How do I apply for Universal Credit?
• Am I eligible for Universal Credit?

Where this comes from

• Advice for decision making, Chapter H3: earned income (DWP)
• Universal Credit: money, savings and investments
• Universal Credit: eligibility
• Universal Credit: what you'll get
• New Style Jobseeker's Allowance
• What to do when you've been made redundant (Insolvency Service)