Money help in the UK when you suddenly lose your job

Losing your job is a shock, whether you saw it coming or not. As well as the emotional hit, there is the very practical worry of how you will pay your rent or mortgage, energy bills and food.

The good news is that in the UK there is more financial help available than many people realise, from redundancy pay and notice pay to benefits and free money guidance. This guide pulls the key points into one place so you can see what you might be entitled to and what to do next.

1. Check if you are actually being made redundant

Redundancy is a specific legal situation. GOV.UK explains that redundancy is a form of dismissal that happens when your employer needs to reduce their workforce – for example because the business is closing, work has disappeared or they are restructuring.
See: https://www.gov.uk/redundancy-your-rights

If your job is ending for other reasons – for example performance, conduct or a fixed–term contract simply expiring – different rules can apply.

Citizens Advice has a plain English checklist to help you check your rights if you are being made redundant, including whether the process looks fair and whether you might be able to challenge the decision.
See: https://www.citizensadvice.org.uk/work/redundancy/check-your-rights-if-youre-made-redundant/

2. Understand redundancy pay and notice pay

Statutory redundancy pay

You will usually be entitled to statutory redundancy pay if:

• you are an employee (not genuinely self–employed), and
• you have at least 2 years continuous service with your employer.

GOV.UK sets out the basic formula:

• half a week's pay for each full year you were under 22
• one week's pay for each full year you were 22 or older, but under 41
• one and a half week's pay for each full year you were 41 or older

Length of service is capped at 20 years and there is a legal maximum on the weekly pay used, which usually changes each April.
See: https://www.gov.uk/redundancy-your-rights/redundancy-pay

Citizens Advice links to the official redundancy pay calculator that uses the current weekly pay cap and your age and service:
https://www.citizensadvice.org.uk/work/redundancy/check-your-rights-if-youre-made-redundant/if-youre-being-made-redundant/redundancy-pay/

Employers can choose to pay more than the legal minimum – this is often called contractual or enhanced redundancy pay. Acas guidance explains that contractual schemes must be at least as generous as the statutory scheme but can use different formulas on top.
See: https://www.acas.org.uk/your-rights-during-redundancy/redundancy-pay

Tax on redundancy pay

GOV.UK confirms that statutory redundancy pay up to £30,000 is not taxable. Tax and National Insurance may be due on other parts of a termination package such as holiday pay, unpaid wages, bonuses and some ex–gratia payments, depending on how they are structured.
See: https://www.gov.uk/redundancy-your-rights/tax-and-national-insurance

If you are unsure, ask your employer for a written breakdown of your final pay and which parts have had tax and National Insurance taken off.

Notice pay

You are normally entitled to notice if your job is ending. The legal minimum notice from your employer is:

• at least 1 week if you have worked for them for between 1 month and 2 years
• 1 week for each full year of service between 2 and 12 years
• a maximum of 12 weeks for 12 years or more service

See: https://www.gov.uk/redundancy-your-rights/notice-periods

Your contract may give you more generous contractual notice. Your employer can either:

• ask you to work your notice and pay you as normal, or
• pay you instead of notice (often called PILON – pay in lieu of notice).

If your employer goes insolvent and cannot pay redundancy or notice pay, you may be able to claim from the government’s Redundancy Payments Service.
See: https://claim.redundancy-payments.service.gov.uk/

3. Work out which benefits you can claim

MoneyHelper and GOV.UK both stress that most people who lose their job should check benefits as soon as possible, even if they have been working for years and have never claimed before.
See: https://www.moneyhelper.org.uk/en/money-troubles/cost-of-living/job-loss

The main options under State Pension age are:

New Style Jobseeker's Allowance (JSA)

New Style JSA is a contribution–based benefit. You may be able to claim it if:

• you are unemployed or working less than 16 hours a week on average, and
• you have paid enough Class 1 National Insurance in the relevant tax years.

Key facts from GOV.UK and Citizens Advice:

• It is paid fortnightly for up to 182 days (around 6 months).
• It can be claimed on its own or alongside Universal Credit.
• Your savings and your partner's income are not taken into account – but your own earnings and some pensions can reduce the amount.

See:

• GOV.UK overview: https://www.gov.uk/guidance/new-style-jobseekers-allowance
• Citizens Advice: https://www.citizensadvice.org.uk/benefits/help-if-on-a-low-income/jobseekers-allowance-jsa/before-you-claim-jsa/check-if-you-can-get-jsa/

Universal Credit

Universal Credit is a means–tested benefit for people on a low income. MoneyHelper explains that after job loss you may be able to get help towards:

• basic living costs
• rent and some service charges
• some childcare costs

if your income and savings are below certain levels.
See: https://www.moneyhelper.org.uk/en/benefits/benefits-and-work/benefits-and-tax-credits-when-youve-lost-your-job

GOV.UK has a dedicated page for benefits and financial support if you are looking for work or affected by redundancy, including links to benefit calculators that estimate what you might get:
https://www.gov.uk/browse/benefits/looking-for-work

If you already receive Universal Credit or tax credits, you must report the job loss and any redundancy pay as a change of circumstances.
See: https://www.gov.uk/guidance/redundancy-help-finding-work-and-claiming-benefits

Other support

Depending on your situation you may also be able to claim or increase:

• Council Tax Reduction from your local council
• help with mortgage interest through Support for Mortgage Interest (SMI) if you are on certain benefits
• disability benefits such as Personal Independence Payment (PIP) if you have a health condition that affects daily living or mobility

Advice agencies like Citizens Advice and Scope have checklists for redundancy–related benefits and stress the importance of reporting job loss to DWP quickly.
See: https://www.scope.org.uk/advice-and-support/redundancy-benefits-work

4. Take stock of your money in the first few weeks

MoneyHelper suggests a simple money checklist after job loss:
https://www.moneyhelper.org.uk/en/work/losing-your-job

Key steps include:

1. Review your budget
   List your essential costs – housing, energy, food, travel, basic phone and internet – and cut back where you reasonably can on non–essentials.

2. Prioritise essential bills and priority debts
   Give top priority to rent or mortgage, council tax, energy and essential travel. If you are worried about arrears, speak to creditors early and ask for affordable plans.

3. Talk to your mortgage lender or landlord
   Lenders and social landlords are used to dealing with job loss. They may agree to temporary arrangements such as reduced payments, term extensions or payment holidays. Shelter and MoneyHelper both say the worst thing you can do is ignore the situation.
   See Shelter's redundancy and housing advice: https://england.shelter.org.uk/housing_advice/money_problems/redundancy_and_housing

4. Check insurance you already have
   Some people have mortgage payment protection insurance, income protection or payment protection linked to loans. MoneyHelper advises checking the terms carefully before you cancel policies or assume they will not pay.
   See: https://www.moneyhelper.org.uk/en/work/losing-your-job/what-to-do-about-debt-if-you-lose-your-job

5. Get free debt advice if you feel overwhelmed
   Organisations like National Debtline, StepChange and Citizens Advice can help you prioritise, talk to creditors and explore options if your income will be lower for some time.

5. Think carefully about voluntary redundancy offers

Sometimes employers ask staff to consider voluntary redundancy. Citizens Advice explains that voluntary redundancy still counts as redundancy for most legal and benefits purposes, but you should think carefully before agreeing:
https://www.citizensadvice.org.uk/work/redundancy/check-your-rights-if-youre-made-redundant/voluntary-redundancy/choosing-voluntary-redundancy/

Points to weigh up include:

• how the package compares to what you would get if you waited for compulsory redundancy
• how long you might be out of work, given your skills and local job market
• how redundancy pay and savings might affect means–tested benefits like Universal Credit
• whether any mortgage or income protection policies treat voluntary redundancy differently from compulsory redundancy.

If you are unsure, it can be worth speaking to an independent adviser or union representative before signing anything.

6. Looking for work and retraining support

GOV.UK and Citizens Advice highlight several sources of free support if you want to move into a new job or career:

• Jobcentre Plus – help with job searching, training and sometimes travel costs for interviews.
• National Careers Service – guidance on retraining and qualifications, including grants and bursaries for some courses.
• Local adult education services and charities offering retraining in sectors that are recruiting.

See Citizens Advice on facing redundancy and planning next steps:
https://www.citizensadvice.org.uk/work/redundancy/check-your-rights-if-youre-made-redundant/if-youre-being-made-redundant/if-youre-facing-redundancy/

7. When to get one-to-one advice

You should seek personalised advice if:

• you are offered a complex settlement or compromise agreement
• you are unsure whether the redundancy process is fair
• you have a disability, are pregnant or on maternity, paternity or adoption leave, or believe you are being selected for discriminatory reasons
• you have multiple debts and are unsure which bills to pay first.

Good starting points include:

• Citizens Advice – employment and benefits advice: https://www.citizensadvice.org.uk
• Acas – employment rights and redundancy: https://www.acas.org.uk/your-rights-during-redundancy
• MoneyHelper – redundancy and job loss money guides: https://www.moneyhelper.org.uk/en/money-troubles/cost-of-living/job-loss
• National Debtline and StepChange – free, impartial debt advice if you are worried about arrears.

Losing your job is stressful, but you are not on your own. Understanding your rights to redundancy pay, notice, benefits and support can buy you breathing space while you plan your next move.