Claiming benefits after being made redundant

When you are made redundant, your income is likely to change. If you are already receiving means-tested benefits, you may be eligible for more support while you have less income. Other benefits may change or stop while you are out of work or if you receive a large redundancy payment.

Lump sums and benefits

If your income is reduced, you can use a budget planner to help you stay out of debt.

Budgeting tools

Working and Child Tax Credits

If you already get tax credits, you must tell the tax office (HMRC) that you are no longer in work. This is called a 'change of circumstances'.

You can tell them at any time, online or call their helpline on 0345 300 3900.

You need to tell them within 30 days of your last day at work.

Report a change to your circumstances for tax credits (HMRC)

Working Tax Credit will continue for 4 weeks after you finish work, unless you apply for Universal Credit.

For most people, tax credits have been replaced by Universal Credit. This means that you may not be able to make a new claim for tax credits when you get a new job.

Tax credits

Council Tax Reduction and Housing Benefit

If you get a Council Tax Reduction or Housing Benefit, you must tell your council when you are made redundant. This is called a 'change of circumstances'.

Council Tax Reduction and Housing Benefit are 'means-tested' benefits. This means the benefit depends on how much income or savings ('means') you have.

If your redundancy payments are low and you have no other income or savings, you may be eligible for more support.

If your redundancy payments give you over £6,000 in savings, you may have to pay more Council Tax. Your Housing Benefit may change or stop.

Report your change in circumstances as soon as possible. You can do this before you finish your employment. You must tell your council within 21 days of finishing your job. You can find their contact details on your Council Tax bill or on their website.

Reporting changes if you get Council Tax Reduction (Citizens Advice)

Find your local council (GOV.UK)

Will redundancy pay affect my benefits? (Turn2us)

Savings and benefits

Call the Help to Claim line at Citizens Advice. They can help you:

• work out what benefits to claim first
• check if you are eligible for Universal Credit
• decide when to apply for Universal Credit

You can also find information about benefits and redundancy on the Citizens Advice website.

Help to Claim (Citizens Advice)

As soon as you know you are being made redundant, check what benefits you may be entitled to. You can do this using a benefits calculator.

Use the Turn2us benefits calculator to find out what you can claim.

Once you know the date that your employment will finish, you can make a claim for JSA or ESA if you meet the criteria. These can be set up more quickly than Universal Credit. Payments can start as soon as you are out of work.

Job Seeker's Allowance (JSA)

'New Style' JSA is based on your past National Insurance (NI) contributions. You may be eligible if you have paid the right NI for 2 out of the last 3 years.

If you have been in work for the last 2 or 3 years, you have probably paid enough NI to qualify for JSA. If you are not eligible, you may still be able to claim other benefits.

You can claim JSA and Universal Credit at the same time. Your JSA payments are taken out of your Universal Credit allowance. It's still worth claiming JSA if you can. There are 2 advantages:

• JSA pays Class 1 National Insurance contributions. These could help you claim benefits in the future, for example, if you become ill and cannot work.
• If you are part of a couple and your partner is working, you can claim JSA without their income being taken into account.

Job Seeker's Allowance (GOV.UK)

Employment Support Allowance (ESA)

'New Style' ESA is a benefit for people whose ability to work is limited by disability or poor health.

Employment Support Allowance

There are 3 main differences between ESA and JSA.

• You will need to take part in a health assessment to claim ESA.
• You will not be expected to look for work while claiming ESA. You may have to do work-related activities, such as preparing your CV. You must look for work with JSA.
• JSA is paid for 12 months only. You can get ESA for as long as you are assessed as being unable to work and are in the Support Group.

You will be in the Support Group if you are assessed as having limited capability for work-related activity. People in this group:

• get a higher rate of ESA
• are protected from the benefit cap
• do not have to do specified work-related tasks

If you already get Universal Credit

You must tell the DWP immediately if you are made redundant. This is called a 'change of circumstances'. Your benefits will change and may increase.

You can tell them by signing in to your Universal Credit account.

Report a change to your circumstances (DWP)

Change of circumstances on Universal Credit

Applying for Universal Credit

Universal Credit is a benefit for people who are out of work or on a low income. You may be eligible if you have less than £16,000 in savings. There are some things to watch out for when you apply after you've been made redundant.

Apply at the right time

When you are made redundant, you may receive several payments from your employer in a short time. This can mean you have to wait longer to get Universal Credit.

For Universal Credit, your income is assessed each calendar month. Any earnings you receive in that assessment period are taken into account.

Payments from your employer that count as earnings include:

• outstanding holiday pay
• your final salary payment
• 'payment in lieu,' when you get an immediate payment to cover your notice period, even if you do not work this

Check how much redundancy pay you can get (Citizens Advice)

Universal Credit (UC) and work

Redundancy payments are treated as 'capital' when you apply for Universal Credit. If you have more than £16,000 in capital when you apply, you will not be eligible. If you have more than £6,000, you can apply but your payments will be reduced.

It's important that you wait until your last salary payment has been paid into your account before you apply. 

If you are over the income limit on the day you apply, you will have to wait another month before you receive your first payment.

This can be tricky to work out when you are made redundant. You may be worried about your income and want to apply straight away. If you're not sure when to apply, call the Help to Claim line at Citizens Advice.

Contact Help to Claim (Citizens Advice)

If you are claiming Working Tax Credit

Your Working Tax Credit will continue for 4 weeks after you finish your job. But, if you apply for Universal Credit, you will lose your Working Tax Credit immediately. This happens even if your application is not successful.

Call the Help to Claim line to check if you will qualify before you apply. You may be better off if you wait to claim Universal Credit.

You can apply for JSA before you finish work. This will not affect your Working Tax Credit.

Universal Credit

Benefits and tax credits when you've lost your job (MoneyHelper)