Will Receiving Personal Injury Compensation Affect My Benefits?

If you receive means-tested state benefits, then the receipt of a lump sum personal injury award may affect your entitlement to certain benefits. Our specialist solicitors have the expertise to advise you on your options to protect the compensation and benefits you deserve and need.
If someone else’s negligence causes you to experience a physical or psychological injury, you are perfectly entitled to seek legal compensation for your suffering.

If you receive a significant ‘lump sum’ compensation payment as part of a personal injury claim, then this can affect your entitlement in the future to receive certain means-tested state benefits.

Means-tested benefits consider your income, savings and capital assets to assess your eligibility to claim. Some means-tested benefits currently include:

  • Housing Benefit
  • Council Tax Support
  • Pension Credit
  • Universal Credit

Suppose the value of your injury compensation settlement, combined with your savings and assets, falls within a specific financial bracket. In that case, it may impact the amount of benefits you can claim from the government.

Here we outline how compensation affects your benefits and explain what you can do to safeguard your entitlement.

Will A Compensation Claim Affect My Benefits?

The short answer is yes, if your total household capital is more than £6,000, you are not permitted to claim some means-tested state benefits.

Suppose a compensation settlement takes you above a certain threshold. In that case, it could affect your entitlement to benefits, which could be stopped or reduced as a result or even prevent you from being able to claim benefits in the future.

What Benefits Might Be Affected?

The means-tested benefits that could be affected currently include:

  • Council Tax Support or Reduction
  • Housing Benefit
  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Medical Benefits
  • Pension Credit
  • Universal Credit

Child Tax Credits and Working Tax Credits are not means-tested benefits and would not be affected

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How to Protect Your Benefits?

If you are entitled to personal injury compensation, you should not worry about receiving the compensation you are entitled to because of any effect on your benefits.

Our solicitors have specialist experience to provide you with practical and simple solutions to mitigate the risks. This includes using a Personal Injury Trust, which allows you to claim the maximum settlement possible without affecting your entitlement to certain benefits.

The law around Trusts is complex; however, with our help, using this funding facility is a great way to protect ‘lump sum’ compensation payments and your right to means-tested benefits.

Here are some of the key features of a ‘Personal Injury Trust’:

  • It can be managed by two or more trustees (you can be one of them)
  • The money in the trust will be held separately from all other assets
  • Only the compensation you have received can be paid into the trust account and this will be taxed in the same way as any other savings
  • You are permitted to withdraw funds from the account, however, to ensure the protection of your benefit entitlement, the amounts must not take you over the savings limit of £6,000
  • If you require social or residential care, the money in your Personal Injury Trust will be safeguarded against care fees

You must seek professional advice by speaking to our expert team, who will happily answer any question you may have and advise on the best way forward.

Why Choose Us?

Our solicitors are experts in personal injury trust and so are ideally positioned to help you put in place future plans. We have helped many individuals and business owners across the country through the sensitive process of setting up a trust for you and the future of your loved ones.

How to Get in Contact

Please call us on 01234 350 244 or email us at info@dvsolicitors.com for further information and advice about our wills and personal injury trust services. We will happily provide you with a free initial discussion about your individual circumstances.
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