Redundancy on UC

[fizzwhizz1]

Unfortunately it appears I am to be made redundant in the next few months. I already claim UC as a single parent. How will the redundancy payment affect my UC?

It will be under £6,000 and therefore won't reach the threshold for savings reductions, but is it treated as income? Or is it disregarded? If its treated as income it will wipe my UC claim for the month and wouldn't be worth having!

Any advice greatly appreciated. Thank you

It is treated as capital if your employer reports it correctly. Therefore unless you already have savings and this takes you over the 6k threshold there won't be any money deducted for savings.

How does an employer report it as capital? Is it a separate entry on the P45? How do UC process it? Do they not deduct 55p for every £1 earnt?

No if your employer correctly reports to HMRC as redundancy pay then it should be treated as capital rather than earned income. The 55p deduction only applies to earned income.

@Miley1967 What should I say to my employer so that it is recorded correctly? Does it have a specific name?
Is pay in lieu of notice and holiday pay treated as earnt income?

Redundancy pay isn’t taxed so the employer has to report it correctly, you should t need to chase them,
Holiday pay and pay in lieu of notice (PILÓN) is taxable income like any other earnings.

Great! Thank you so much for clarifying! Most information online is for people who are made redundant and then need to apply for UC, not for people already claiming.