Hi, my name is Helpmelord1968! How will a PILON affect UC?

Helpmelord1968
Helpmelord1968 Community Member Posts: 2 Listener
edited February 2025 in Universal Credit (UC)

Hi, I need some help here for UC payments. I was dismissed from work at the end of January due to medical inefficiency. I am due to receive 7 weeks' PILON, approx £4000. I had read that UC will take this amount into account for more than one assessment period, meaning I could get nothing for months. But I notice on here that someone was advised that it would only count for one assessment period. I have not claimed UC yet, because I was unsure of what I was entitled to and when, and now I am even more confused!

Comments

  • anisty
    anisty Community Member Posts: 862 Championing

    You can have up to £6k without UC being affected at all. Have you other savings that take you over 6k?

  • poppy123456
    poppy123456 Community Member Posts: 64,375 Championing

    As you're not claiming UC at the moment then it will not be treated as earnings. It will be treated as capital. If this takes your total capital to more than £6,000 there's a £4.35/month deduction for every £250 or part thereof over that amount.

    My advice would be to claim UC after you receive the earnings from your employer.

  • poppy123456
    poppy123456 Community Member Posts: 64,375 Championing
    https://forum.scope.org.uk/discussion/comment/981903#Comment_981903

    The part of the earnings that are taxable will be treated as earnings and the work allowance would apply here, which would be £404. For every £1 over that amount her UC will reduce by 55p in the assessment period in which she receives the final pay.

    Depending on how much she receives then surplus earnings rules may apply here but it's so complicated and not something I would like to advise on. If it does apply then it may affect more than 1 assessment period. See link. https://www.gov.uk/guidance/universal-credit-and-earnings#if-you-earn-2500-or-more-over-your-earnings-limit

    The other part of what she receives will depend on how her employer reports it to HMRC. I do know that redundancy pay isn't treated as income, it's capital.

    For the work that needs to be done then providing it's reasonable I can't see that they would treat it as DoC. Of course ultimately it will be down to a decision maker to make that decision.

    Please also remember that entitlement to UC is based on your circumstances on the last day of each assessment period. Therefore, if she has it and spends it before that then she hasn't deprived herself of anything.

  • poppy123456
    poppy123456 Community Member Posts: 64,375 Championing
    https://forum.scope.org.uk/discussion/comment/981992#Comment_981992

    You’re very welcome, as always! For her UC to be affected for several months and it would need to be quite a substantial amount she receives. Please note, I’m not asking you to tell me how much it is.

    I think i remember you asking about her claiming New style ESA, if she does then this will not be affected by the money she receives because she’s not currently working.

    I agree that UC is complicated, it took me a long time to get my head around it.

  • Helpmelord1968
    Helpmelord1968 Community Member Posts: 2 Listener

    Thank you Poppy and Anisty, for your kind assistance. I don't have any savings at all, but I am due to receive compensation to the tune of around £15000, a month or so after the PILON. Would it be better to wait until after that before claiming? I need a new car, as I wrote mine off last year, and a few kitchen appliances are at the "condemned" stage! So, ideally I'd like to spend a chunk of that money, but obviously still need to eat and pay bills

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