How does redundancy pay affect Universal Credit?
Statutory redundancy pay counts as capital for Universal Credit. Ask your employer for an itemised breakdown because final wages, notice pay and holiday pay can be treated as earnings. For a joint claim, count both partners’ capital.
What the £6,000 and £16,000 limits mean
- Up to £6,000 in countable capital normally has no effect.
- Above £6,000 and up to £16,000, Universal Credit is normally reduced by £4.35 a month for every £250 or part of £250 above £6,000.
- Above £16,000, you normally cannot get Universal Credit. Special rules can apply, including to some people moving from tax credits.
Examples for a £10,000 or £30,000 payout
With £10,000 in total countable capital, the £4,000 above the lower limit produces a £69.60 monthly reduction. A £30,000 payout that remains countable would normally put you over the upper limit. Report the payment and relevant changes in your Universal Credit account.
Use the statutory redundancy calculator for the gross payout estimate and the Universal Credit calculator to model the resulting capital balance.
Official guidance · Read the GOV.UK guidance