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

Do I need a personal injury trust?

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 benefits will be reduced.

When you receive a sum of money you must inform your benefits agency, which will decide if your entitlement to benefits should change. If you have received personal injury compensation, are there options?

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.

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.

If you open a bank account or receive interest on a bank account, the tax authority is informed and that information is fed 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, your only choice is to set up a personal injury trust. A trust to protect your benefits means you keep your benefits 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. Weigh this against keeping your benefits and using the compensation and the choice is easy.

Related content

Personal Injury trusts and how I can help
Personal injury trusts guide

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Receiving interim or final compensation payment?

You may need a trust to protect benefits and local authority care.

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