I have received personal injury compensation and I claim means-tested benefits

Receiving means-tested benefits depends on the money held by you and those included in your claim. The usual barrier to a claim is holding £16,000, but if you hold more than £6,000 your benefit entitlement is reduced.

When you receive a sum of money you must inform your benefits agency which will decide if your entitlement to benefits should change. So if you have received personal injury compensation do you have any options? The factors to bear in mind follow.

When you make a personal injury compensation claim the insurance company receiving your claim must inform the Department of Work and Pensions (“DWP”) of the claim.

If you receive an interim payment or final settlement the insurer must inform the DWP.Help on personal injury trust 0330 223 1708

When you receive an interim payment or final settlement you must tell your benefit agency of the change in your financial circumstances.

Personal injury compensation will be disregarded for a period of 52 weeks, but take care and read on.

Some incorrectly say you can blow the compensation in that 52 week period. You can spend it, but if your benefits claim continues, how you spent the compensation will be scrutinized. If you are shown to have blown the money to allow you to continue claiming benefits you will be penalized. The compensation is not ignored permanently. The 52 week period is there to allow you to sort out your affairs and set up a trust, not blow the money and keep your benefits.

If you open a bank account or receive interest on a bank account the tax authority is informed and that information is fed back to the benefit agencies.

As we move into the Universal Credit system there will be more information shared between the various agencies of the government.

Unless you have a small sum in compensation, or legitimate ways to spend the compensation quickly, your only choice is to set up a personal injury trust. A trust to protect your benefits will give you time to stop and plan and use the compensation for what it was intended.

There is an inconvenience in a trust, as you need trustees and a separate bank account, but weigh this up against the benefit of keeping your benefits and the choice is easy.

About Mark Thompson

Personal injury and accident specialist solicitor
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109 Responses to I have received personal injury compensation and I claim means-tested benefits

  1. Sian says:

    I have just recieved £2800 personal injury compensation and I claim single persons jsa along with child tax credits and child benefit..I dont have any other savings or money coming in. Do I have to declare my compensation? Thanks

    • Mark Thompson says:

      If your JSA is means-tested, your financial position has changed so you should declare the compensation. You may find you are only on contributions-based JSA, in which case it is not a means-tested benefit and there is no need to declare the compensation.
      In any event, if you have no other money, receipt of £2,800 will not effect your benefit entitlement.
      Child benefit is payable to a household with income below £50,000.
      Tax credits are based on income. Compensation is not income.

  2. emma says:

    thankyou we recieve income based jsa and we dnt have any savings

    • Mark Thompson says:

      With the compensation, your total funds will be well below £6,000. If £1,088 is all you are to receive from this personal injury claim, you do not need a trust.

  3. emma says:

    hi im due to recieve a compensation payment of £1,088 my partner claims jsa for the both of us and i recieve child tax credits/child benefit.will my benefits be affected? And can i spend that money or do i have to keep hold of it for 52 weeks

    • Mark Thompson says:

      I do not know if the JSA is contributions based, or depends on the family finances. I will assume you are receiving one or more means-tested benefits.
      You get full finances if you have funds below £6,000, with a gradual reduction up to the maximum funds of £16,000. If the £1,088 you are to receive leaves you well below £6,000, you do not need a trust.
      Child benefit is paid to households with income below £50,000, so compensation will not effect eligibility.
      Child tax credits depend only on income, so the compensation only plays a part if you gain income from the compensation. More information here on tax credits and compensation.

  4. Sue lumsden says:

    Hi there. I’m on esa and been involved in a accident I’m not sure the amount of compensation I will be awarded but I’m wanting to know.
    Do I have to declare it to the esa, am I allowed savings if so how much before I have to declare it.
    I was told £9,000 but I’m not sure.

    • Mark Thompson says:

      Do not worry about benefit agencies until you know you are actually going to receive compensation and the amount.
      For most benefits you can hold up to £6,000. You can actually hold up to £16,000, but between £6,000 and £16,000 the benefits are reduced.
      To understand your benefit entitlement there are a number of benefit calculators online, my current favourite being at http://www.entitledto.co.uk

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