Hi, my name is Helpmelord1968! How will a PILON affect 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!
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You can have up to £6k without UC being affected at all. Have you other savings that take you over 6k?
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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.
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Poppy, as I mentioned before, I’ve been helping and supporting a friend who left work nine months ago due to the pressures and stress she was facing. She is on Universal Credit and receives LCWRA. I have a few questions. She will be receiving PILON and outstanding holiday pay, which will be treated as income and subject to tax and National Insurance. However, due to the way her absence was handled, they will also be compensating her for loss of office. Since this payment isn’t subject to tax or National Insurance, I’m assuming it will be considered capital rather than income for DWP purposes.
She will receive a large sum, but it will be under £16,000, and she understands the deductions for every thousand pounds over £6,000.
Additionally, my friend rents her home from the local authority. When she was married, her ex-husband left the back garden in poor condition, with rubbish that is neatly stacked but takes up most of the garden down one side and still needs to be cleared. She also has a summer house that needs to be dismantled. Now that she has the funds, she plans to address these issues. My concern is whether the DWP might view this sudden substantial expenditure as deprivation of capital. The work needs to be done, but I’d really hate to see her get into trouble with the DWP over it.
Another question is regarding her council tax reduction. Does she need to inform her local authority about the changes in her circumstances, and will she now have to pay the maximum council tax due to the funds she’s receiving?
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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.
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.
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Thank you so much, Poppy! The link was really helpful. After reading it and considering her circumstances, it looks like she’ll have surplus earnings for several months. Thank you also for answering all the other questions in my last post.
Honestly, I take my hat off to you, Poppy, for how well you understand the system. What would we do without you? I’ve never come across such a confusing system before, and I’ve dealt with some pretty complicated situations in my job. But this system? I truly believe it’s designed to confuse people. No wonder millions of benefits go unclaimed each year, you’d need a degree in hieroglyphics to understand it. It’s absolutely bonkers!
Again, I truly appreciate your help, and I know my friend will be grateful, as she’s really in a bit of a pickle with it all.
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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.
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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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