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

  1. Theresa Jones says:

    Ihave been made redundant i am currently on universal credit,i amdue a pay out from an accident,my solicitor had advised to put it in a trust fund,will my benefits stop completly if i get over £8000.thank you.

    • Mark Thompson says:

      Means tested benefits stop if you have savings of £16,000 and reduce if you have more than £6,000. You should decide on a trust onc eyou know how much compensation you will receive.

  2. Kelly says:

    I am self employed and on a low earning wage. I previously claimed tax credits to top up my wages, which were changed to universal credit as a low earner. Each month I have to go online and declare my earnings for the month and they work out my entitlement. I have just been awarded £1900 for a non fault road accident so would I have to declare this to DWP as it’s not earnings?

    • Mark Thompson says:

      The compensation is relevant to Universal Credit, but will not reduce the benefit, provided you do not have much money in savings.
      Do declare the compensation and make it clear the money is personal injury compensation. The compensation is not income, but it is best to be open about what money you have.
      Unless your savings exceed £4,000, with this level of compensation, you will not need a trust.

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