Will my redundancy pay affect my benefits entitlement?
Redundancy payments are treated as capital for means-tested benefits. If your redundancy payment takes your capital to over £16,000 and you are under State Pension age, then you are not entitled to means-tested benefits (except maybe second adult rebate for Council Tax Support if your local authority offers this as part of their scheme).
If your redundancy payment takes your capital to between £6,000 and £16,000, you may be entitled to means-tested benefits, however, it is assumed that you receive some income from your capital and your benefit amount is reduced as a result.
Contractual redundancy pay is treated slightly differently for Jobseeker's Allowance. The statutory redundancy payment is deducted from the contractual redundancy payment and the difference is ignored completely. For other means-tested benefits it is still treated as capital.
Pay in lieu of notice and holiday pay is ignored for means-tested benefits, provided you make the benefits claim after your employment ends.