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

  1. Rebecca says:

    If I sue for spinal injuries I’ve been told my claim would be worth in the region of 1 million pounds. I’m currently receiving ESA & housing benefit as I was already ill before my spinal injury. Could I buy a house with my compensation & keep receiving benefits? I’m crippled paying to privately rent & a Home would give me security. Thank you

    • Mark Thompson says:

      You do not yet know what you may receive as compensation.
      To preserve your ability to claim means tested benefits and seek support with care, all compensation should be held in a trust. This is a legitimate step, allowed by the benefit regulations.
      The trust should buy the house, as this will mean it cannot be taken into account in a financial assessment for care.

  2. Anpnymous says:

    I’ve received a letter from the DWP saying that the compensation unit must back the amount of social security I received due to my compensation – no payment is due from me, but here’s the thing – Im not on ANY benefits and haven’t been for roughly 8 years! Why did I get this?

  3. Scott says:

    Hi I wrote to you earlier about intrem payments imreceiving from my solicitor they are regularly I.e. monthly , the case is still ongoing but the other side send money to my solicitor which he then sends onto me.its still abit short of what my wage was at the time and all the monies received will be deducted from the final settlement do I need to inform my universal credit office?

    • Mark Thompson says:

      You should read the information provided by your benefit agency carefully. If your financial circumstances change you should advise the benefit agency.
      If the first interim payment was more than, or close to, 52 weeks ago, you should be setting up a trust. read about the 52 week disregard here.

  4. Theresa says:

    I have just found that a pc dealing wit a case against my ex has put in a claim for me she called and said I have been awarded 11000.00 I intend to put most of this in my children’s savings accounts for them and use some for us to move so as to protect us from my ex. Will me sharing this money between my 2 children for their future be a problem as I currently claim benefits.

    • Mark Thompson says:

      If the payment relates to an injury to you, you can hold that money in a trust so it will be ignored for benefit purposes.
      Giving the money to your children will not protect your benefits. A benefit agency will treat the money as yours and reduce your benefit payments.

  5. Hi,

    My father is currently in the process of going though a no win no fee claim for an injury he sustained at work which has caused him to be off work for the past 4 years claiming disability benefits, if he wins his claim and lets say he gets £100,000 will he have to pay back what he has claimed in benefits over the past 4 years?

    Thank you 🙂

    • Mark Thompson says:

      You are thinking about a process called recoupment.
      The party paying the compensation has an additional liability to repay to the government any benefits paid out as a result of the injury.
      The injured person does not actually make repayment to the government, but must give credit for certain benefits against certain aspects of their claim.
      Read the detailed explanation here.

  6. Scott says:

    I have just started a new claim for universal credit I currently receive intrem payments from my solicitor due to an ongoing case should I have informed the universal credit people?

    • Mark Thompson says:

      It is a change in your financial circumstances, so should be disclosed.
      If the amount takes your savings over £6,000, you need a trust now. If not, then when you are offered a second interim payment, you will need a trust to receive the payment.

  7. Paul says:

    Hi my daughter has a negligence case going to court for pre trial hearing two years ago particulars of claim were sent to her and I assume the defence. At a without prejudice meeting our barrister said there was a miscalculation of figure’s, my daughter gives about 9 hours a day for her husband however we believe the defence have challenged the figures, the recalculation decemates the compensation claim can this be done at this stage

    • Mark Thompson says:

      I do not know enough about the case to give certain advice.
      It sounds as though the claimant has amended their special damage calculation, which means the financial losses claimed. The defendant can then put forward its arguments against the claim. The information is usually set out in a schedule and answered in a counter schedule, which, subject to Court directions, can usually be updated and/or amended to a point quite late in the case.

  8. Anna says:

    Hi I will recive compensation from Council for Lost home £ 6,200 . Did that sum affect my universal payment ?

    • Mark Thompson says:

      Your enquiry is posted on a page which explains how compensation paid in consequence of personal injury can be held in a trust and ignored for benefit purposes. This relates only to compensation for personal injury. The term personal injury is given a broad meaning which you can read about here.
      There are some compensation payments which include a payment for psychological injury, injury to feelings and upset. Sometimes this part of the compensation can be held in a personal injury trust.

  9. Paul Fenlon says:

    Hi Mark can you advise please. A case was settled and an amount was paid into a personal injury trust however the solicitor has since been sued for negligence, this is about to be settled the advice given is that this money cannot be added to the trust. Is this correct and also can something else be used to help continue with receiving benefits. Thanks.

    • Mark Thompson says:

      The benefit regulations cover a situation where “the funds of a trust are derived from a payment made in consequence of any personal injury…”
      If your personal injury case was not conducted properly and compensation has been paid by your solicitor, I think that compensation is still paid “in consequence” of personal injury. I think you can add the compensation for the solicitor negligence to the initial compensation payment held in to the trust.

  10. Lorna says:

    hi Mark I spoke to you today 2ndsept 2019, with regards making a trust deed for my soon conpleted compensation.
    you asked if I had had an interim payment I said no I hadn’t . though after I spoke with you my solicitor did infact ask for an interim payment to pay for the CBT therapist, I did not have the money paid in to my bank account , though I believe it was paid into the solicitors office , my solicitor paid the therapist direct. Do I need to set up the trust deed because of this interim payment or wait as you advised until the compensation is settled ?

    • Mark Thompson says:

      Your solicitor may hold an interim payment, or may hold a payment made by the defendant insurer under the Rehabilitation Code. A payment under the Rehabilitation Code is not a payment to you, so is not treated as an interim payment.
      If your solicitor holds an interim payment in its client account, that is your money for benefit purposes.
      The first payment of compensation for personal injury will be ignored by benefit agencies for a period of 52 weeks. Agencies sometimes mistakenly think a trust must be set up within that 52 week period.
      If the first payment leaves your funds below £6,000, it will not reduce your benefits, but what you spend may be treated as notional capital. You should certainly set up a trust if a second interim payment is to be made, or to receive your compensation at final settlement. You can read more about the 52 week disregard here.

  11. Richard says:

    Thank you for your reply Mark. Would I still have to mention the amount of money in the trust bank account on the form and also list all the properties and their values in the ‘money and properties held in trust’ question as well as income from property rental from the trust?

    • Mark Thompson says:

      I would treat everything in the trust as one entity. Simply tell the agency you have a trust. Those separate categories are for your personal assets. If you include a trust property in the property list, you will cause confusion, as it will appear to be a personal asset.

  12. Richard says:

    Hi Mark, when filling in forms on a benefits claim (ESA3 in particular), how should money and properties held in a personal injury trust be treated? For example, it asks about how much you have in your bank accounts, savings etc one being ‘money and property held in trust’ and then the next question asks ‘How much are the savings worth in total?’ (Add together all the amounts) – this is going to be a large amount of ‘savings’ for me, how will they see this?

    Another question is, where it asks if you own your own home and do you and your partner own or jointly own any other property in the UK. All my properties were bought under the trust (bare trust), should I still answer the questions as if they were bought in my name?

    Thank you

    • Mark Thompson says:

      When you received compensation and set up the trust, you will have given notice of both to the benefit agencies you were dealing with at the time.
      For any further benefit application, make sure you tell agencies you have a trust for your compensation. Do not report each individual trust asset in different parts of the application. Treat all trust assets as one and just make sure you include notice of the trust. You have properties held in the trust and own none in the name of yourself and/or partner. The answer to the property question you mention is none, as the properties form part of the trust.
      If the trust properties are rented, make sure the income is paid to the trust.

  13. Adam paul says:

    I’m am currently self employed and I’m suing the NHS for negligence. In the time iv had off work iv had to claim universal credit and now I’m being told that they can claim some of the money back that I have recieved from universal credit. Is this right and how much of the £15000 can they claim back?

    • Mark Thompson says:

      I think you are asking about a process known as recoupment. When a party pays compensation to you, it must make an additional payment to the government to repay any benefits you received as a result of the injury. That is a payment from the compensation payer to the government, not a payment from you.
      Within the calculation of your claim, you must give credit for certain benefits against certain parts of your claim. For Universal Credit, the amount of benefit you received will be deducted from any loss of earnings claim. You can read more detail here.

  14. Angela says:

    I received 1600 pound criminal injury comensation a year a go and didn’t declare this due to mental stress i claim benefits I didn’t realise I had to tell them but I haven’t touched the money because it makes me feel guilty what do I do

    • Mark Thompson says:

      If the amount was £1,600, you should have told the benefit agency. Unless your total funds exceeded £6,000, receipt of the money will not have created a problem.
      If, as I suspect, you received £16,000 (sixteen thousand pounds), the sum should have been notified t benefit agencies. That amount of money does affect your benefit entitlement. If I have guessed right, you need to set up a trust and then try to sort things out with benefit agencies. How I work and the fixed cost is explained here.

  15. Karen says:

    Can you clarify the situation for me please.

    I am due to receive £6000 in compensation – £1,500 will be deducted for costs for Solicitors so I will receive the remainder of £4,500.

    Do I have to declare this to DWP?

    • Mark Thompson says:

      You must tell the benefit agencies when your financial circumstances change. Receipt of £4,500 is such a change, so you should inform the agencies handling your benefit claims.
      You can hold up to £6,000 and claim full benefits, so provided your savings are low, receipt of the money will not reduce your benefits. If you have savings which will mean you have more than £6,000 when the compensation arrives, then you should hold the compensation in trust.

  16. FaintingMary says:

    Can I please ask. I am a single parent household in receipt of UC (nightmare) with an adult child 20 at University who is making a claim for NHS negligence. Adult child does not receive benefits. I’ve been told that her payout will affect the amount of UC that I receive? Is this correct because it seems very unfair? Surely we should be treated as separate entities?
    Thank you

    • Mark Thompson says:

      Most benefit payments are based on the household, not just individuals within the household. I think the point you raise comes from the calculation of housing benefit, there being a presumption that adult occupants contribute to the rent, whether they pay or not. This same concept is now part of Universal Credit.
      I suspect you found my website as you were investigating whether a trust for the compensation would protect your benefits.
      A trust for personal injury compensation only protects the benefits claimed by the injured person, or their partner. So, your child’s compensation held in trust, will protect your child’s benefit entitlement, but not yours.

  17. Chris says:

    Many thanks for your guidance, it is very much appreciated.

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