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
This entry was posted in Personal injury trust. Bookmark the permalink.

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

  1. Daniel says:

    I received interm payment of 4500 last year June when on ESA. This year I awaiting another interm payment of 4500 as my recovery continues do I need to set fundtrust to be able to continue ESA ? Or this year payment will count as new for separate tax YEAR?

    • Mark Thompson says:

      You have received £4,500 as an interim payment and you are to receive another payment of £4,500.
      The best approach is to set up a trust now and pay the second interim payment into the bank account set up for the trust.
      Compensation is ignored for 52 weeks from first receipt of compensation, but how you spend that money is not ignored. To avoid a squabble as to what is and what is not reasonable expenditure for someone in receipt of benefits, set up the trust now to receive the interim payment and any more compensation you receive. I write trusts to receive all personal injury compensation, so the one trust accepts all compensation.

  2. Garry Duggan says:

    Hi my wife is disabled and I am a full time carer, we receive ESA as a couple, I receive carers allowance and we get housing benefit. I am possibly due to receive a tribunal award for unfair dismissal and also a payment for accident damages how will this affect our benefits and what is the best thing to do to avoid losing benefits? Also can you tell me how drawing off my pension when I reach 55 could affect benefits. We have a considerable amount of debt and need a newer second hand car but are unsure how we will be affected please help!!

    • Mark Thompson says:

      Compensation paid in consequence of a personal injury to you can be held in a trust and will be ignored for benefit purposes.
      An Employment Tribunal award for unfair dismissal is unlikely to be paid in consequence of a personal injury, so that award will be treated as capital when your benefit entitlement is assessed.
      It is possible that a benefit agency will accept repayment of debt and purchase of a modest car, as reasonable expenditure, but there are no defined rules.
      Income from your pension, or a lump sum withdrawal, will be treated as income or capital and may well reduce or stop your benefits. While the money sits in the pension fund it will be ignored for benefit purposes.
      There is a useful benefits calculator available here.

  3. Rich says:

    I have been totally confused with how a trust works it says you have 52 weeks to spend money without having inform anyone after this what happens are your benifits only effected after 52 week period if you have savings over 16.000 i have found this all very confusing and concerned about not doing things properly. I assumed money put aside in a separate account would not be looked at for the first 52 weeks. Can you please explain a little more please

    • Mark Thompson says:

      I am afraid you have been confused by some nonsense on the internet.
      The benefit regulations set out a list of capital which will be disregarded, or ignored, when assessing entitlement for means-tested benefits. There are two disregards relevant to your question:
      1. a payment made in consequence of personal injury will be disregarded for 52 weeks from first receipt of compensation: and
      2. a payment made in consequence of personal injury held in a trust.
      The idea of the 52 week disregard is to give you time to set up your trust. It is NOT a period when your compensation is invisible, or can simply be blown. Benefit agencies can look at your expenditure within that 52 week period. If the expenditure is not considered reasonable for someone in receipt of benefits, you will be treated as still having the money, called “notional capital, which may mean your benefits will stop or be reduced. I suggest you wait until the trust is set up before making any expenditure.
      You are bound to notify benefit agencies of a change in financial circumstances. You cannot avoid this obligation for 52 weeks.
      More detail can be found here.

  4. Kadisha says:

    Hi. I recently received a compensation claim of £2600. I’m currently a student and receive £5000 from my maintenance loan. I’m not on any benefits or receive tax credit etc. I do get council tax reduction as I’m a student.

    Will I need to set up a special needs trust. Or should I be fine when going ahead with the claim without there being any issues.

    • Mark Thompson says:

      You can receive full council tax reduction provided you hold less than £6,000. If your compensation leaves you safely below that figure there is no need for a trust.

  5. Julie says:

    Hi Mark, I’m about to receive compensation from cica in excess of 11k. I work part time and claim carers allowance as I care for my husband with terminal cancer. Husband gets contributions based esa and pip. We also get council tax reduction but we have a mortgage. How will the compensation affect us please? Do I need to set up a trust fund? I will need to use the money to pay for his funeral when the time comes.

    • Mark Thompson says:

      I am assuming you have no other savings. Compensation of £11,000 will reduce your Council Tax Reduction, as this is a means-tested benefit. If you have some savings and together with the compensation you have more than £16,000, your Council Tax Reduction will stop.
      Provided you have not received an interim payment, you can hold the compensation for 52 weeks, but you cannot spend it. You will need a trust and a trustee bank account set up within that 52 week period to ensure means-tested benefits continue.

  6. sophie says:

    hi… my partner receive esa contribution based…we receive child benefit child tax credits…housing benefit and council tax support… we do not have any savings… we was in a rta where the driver drove off and are going to receive a personal injury claim….after solicitors have deducted there fee we will receive 5425 all together… Will our benefits be affected?

    • Mark Thompson says:

      Claimants of means-tested benefits may hold up to £6,000 and still receive full benefits. If the compensation you receive does not take your total funds above the £6,000 figure your benefits will not be affected.
      Your financial circumstances have changed, so you ought to tell benefit agencies about receipt of the compensation.

  7. Katharine says:

    Hello I was a passenger on an arriva bus when i had minor injury and am awaiting a small compensation possibly £1500 after solicitors no win no fee costs.
    Everything is going ahead and it is up to the courts what I can get but I opened my big mouth at the jobcentre and mentioned it thinking the accident may get me some sympathy for the fact my ongoing jobsearching is going no where.
    I claim universal credit and pay rent fromt this then have to cover bills etc with the rest which is never enough! Do I really have to inform the DWP of this??
    I sort of understand why so I don’t appear to be a cheat but it shows another reason I feel miserable as while being on universal credit you cannot escape unless you work 40 hours a week. I feel silly for opening my big mouth but then could I get caught for NOT telling them should I be awarded?

    • Mark Thompson says:

      You have to tell a benefit agency of any change in your financial circumstances.
      There is nothing to worry about, as you can have up to £6,000 before your benefits are reduced and up to £16,000 before your benefits are stopped.
      If you do get a settlement which takes you over the £6,000 mark, then set up a trust to legitimately keep your compensation and benefits.

  8. Claire says:

    Hi i am hoping you can help. I am currently awaiting a compensation claim from cica roughly 22000.
    I have been on benefits a number of years due to epilepsy but i have recently told them about the ibs and ptsd due to the abuse.
    My question is will i recieve the full 22000 or will benefits be repaid to them for what i have claimed.

    • Mark Thompson says:

      The offer letter from the CICA will identify their offer. There is no separate liability on you to repay benefits, as that will have taken place within the calculation of your financial loss.
      You will need a trust to protect your benefit entitlement. You can see how I can help here.

  9. Kate says:

    Hi Mark! I’m soon to receive my 1St interim and in the process of setting up a PIT with SKIPTON as advised, they’ve been so so helpful and would recommend to anyone needing a PIT. if my interim goes in my current account then into my PIT in a few weeks in completion, would I have to contact hmrc to inform them (they know anyway and ESA to be paid back), and also can I keep under 6k in my current account per annum or at any one time? Also if any interest is occurred on the amount in the PIT bond, is that classed as earnings and taxable or affect benefits? It’s a large sizeable amount. Can you recommend a financial advisor that specialises in this field as I’m aware the line between legal and finacial advice is rather thin. TIA for letting another pick your brain, I’m surprised you have any left!

    • Mark Thompson says:

      If you set up a bare trust, there is no need to inform the tax authority, HMRC. A bare trust is not considered as a tax payer, that being the person who set up the bare trust. Any income or gain on the trust assets will be taxable in your hands, so your personal tax allowances will apply.
      Your trust must not pay you a regular income, as the DWP will argue there is no division between you and the trust. Make any necessary payments direct from the trust.
      Any money paid into your own account will be taken into account by benefit agencies. Your expenditure will be analysed as to its reasonableness for someone receiving benefits. Most expenditure will not be seen as reasonable, so you will be treated as still holding that money, this being called notional capital. If you did as you suggested you would have enough notional capital to reduce and then stop your benefits within a year or two. Transfer a small amount initially, way below the £6,000 allowed, to make life a little easier, but do NOT repeat the transfer from trust to you for fear of the notional capital rules. The answer is to make expenditure direct from the trust.

  10. Karen says:

    Hi I am currently receiving housing benefit and council tax. I work part time on a low wage, I have just received £1700 for an accident in compensation, on the mandate from the solicitor he has said I have to notify housing benefit? Or maybe set up a trust? Do I have to notify them? I have no other savings, kind regards

    • Mark Thompson says:

      Your financial circumstances have changed, so yes you should notify the council responsible for payment of your benefit. If you have no savings and are to receive £1,700, you do not need a trust, as your benefit will not be reduced.
      Notify your council by letter and give them the figures. If you telephone you risk a knee jerk reaction, with benefit being stopped while someone thinks about it. Benefit agencies are anxious to avoid overpayment,. as they rarely get money back, so they sometimes act too quickly to stop benefit payments

  11. Helen Hill says:

    My Stepfather was awarded £100k medical negligence damages when my Mother died. He gave some of this money to myself and 2 sisters. 4 years later he has been diagnosed with dementia. If he is means tested for care home fees, will this be classed as deliberate deprivation? He currently has savings above the £23250 threshold, so he would be fully funding.

  12. Natalie says:

    I am in receipt of child tax credits and income related ESA I was in a car accident which was quite serious and I am looking of compensation of about £80’000 plus my loss of earnings which are around £50’000 but I have seriously financially struggled since the accident. I have the solicitor asking if I want to ask for an interim payment but I am worried that any amount will affect my weekly benefits and I need to buy a car so once I buy the car I won’t have anything left so I will still need the benefits to survive day to day. How much can I ask for without it affecting my weekly benefit income? Due to the amount I am likely to get I will of course not be looking to continue claiming but I just need enough to get my car now as the end Comp claim could take another year or two to come through. Many thanks

    • Mark Thompson says:

      If your funds exceed £6,000 your benefits will be reduced. If your funds exceed £16,000 your means-tested benefits will cease. between those two figures there is a sliding scale.
      You are currently in receipt of means-tested benefits and expect an interim payment which you plan to spend on a car. I do not believe benefit agencies will see the purchase of a car as reasonable expenditure. You will be treated as still having the amount of money you have spent, called nominal capital, and if that takes your funds over £6,000 your benefits will be reduced.
      If the compensation is placed in a trust, the car can be bought from the trust without any affect on your means-tested benefits.
      You say you do not intend to remain on benefits, but to take account of what the future may throw at you, it strikes me as sensible to set up a trust now.
      Some people will say, spend the money how you like and do not inform the benefit agencies. What they do not know is that every compensation claim and compensation payment is reported to the Department for Work and Pensions. It seems pointless risking prosecution and a claim for repayment of benefits when the trust option is available to you.

  13. Sharon says:

    Hi, I am looking at getting around £15k (after benefits reductions) for a accident at work. Half of the compensation is loss of wage. I understand how the trust works as such and the purpose of it. My query is regarding if I don’t set up a trust and what the DWP regard as suitable expenditure. My problem lies in the years back wage I will receive – I don’t see how they can scrutinise that – they will receive back all benefits paid out in that time then receive the balance – most of which will be used to pay back debts. Debts accrued in 6 months after the accident when I was receiving £88 week SSP and my monthly bills including a mortgage. I HAD to borrow and I had to borrow from family as I couldn’t get a loan as couldn’t afford repayments obviously. I have a bank record for most of the money borrowed from family. I am hoping after a year I will be back in employment but if not obv they would look at how I spent the money. Does the loss of earnings element count in what they look at it? I don’t see how it should as I said before because they get back what they paid out to me so those wages should be mine to spend as I wish (unfortunately debt). I had hoped to be getting a bit more in compensation so would like to avoid the trust cost if possible. Also day to day spending, the benefits I now receive are obv diff from say someone receiving the same benefits but also getting their rent paid which is a massive difference – so could this possibly be taken into account. Or – sorry, another thought could I set up the trust to pay my mortgage every month as I don’t receive any help towards it leaving my benefits for my other bills and day to day living? It’s all very complicated and annoying and it really bugs me that they have a say over my wages.

    • Mark Thompson says:

      You cannot break down a personal injury compensation award into its constituent parts for the purposes of benefit regulations. The benefit rules allow you to hold compensation paid in
      consequence of any personal injury in a trust. All compensation paid as a result of personal injury will count against your benefit entitlement unless you hold it in trust.

  14. John says:

    I’m undergoing proceedings in relation to my acciden which is classed as serious injury and have been told the case is worth in excess of 100k.
    My solicitor informs me I should be claiming PIP due to mobility issues
    If I claim this support , when the case is settled will an amount be paid back to the government or will this not be affected on the final settlement figure

    • Mark Thompson says:

      I think you should claim all the benefits to which you are entitled.
      The insurance company or organisation paying the compensation, called the compensator, will pay compensation to you and in addition repay all accident related benefits to the government. This is the liability of the compensator, not you. This is called recoupment of benefits.
      However, within the calculation of your financial loss, you must give credit for certain benefits against certain aspects of your compensation. An example would be the mobility element of the Personal Independence Payment. If you claim compensation for mobility, then you must give credit for the mobility element of your benefit. There is a detailed explanation of recoupment of state benefits here.
      So treat benefits as a payment of on account of compensation and make all possible claims now.

  15. Chloe Small says:

    I’m on incomes based benefits I currently have savings of under £6,000, my children have savings under £3,000 each. Firstly can I ask are the children’s savings still classed as my money as they’re under 16 years old so I have control and trustee although accounts in their names. Also is it all children are allowed up to £3,000 in savings or is this per child and only allowed £3,000 altogether.

    Many thanks

    • Mark Thompson says:

      I do not offer benefits advice, I prepare trusts for personal injury compensation to allow compensated people to keep their benefits and compensation.
      You are asking your question at a time of great change in benefits. The position used to be that up to £3,000 child savings was ignored for most means-tested benefits. If a child had more than £3,000, then the element of benefit paid for that child would stop. With the use of Child Tax Credits to replace the child element from some benefits, plus the move to Universal Credits, a simple answer is no longer possible. I suggest you use a benefits calculator here.

  16. Mo says:

    Hi, I’m currently on JSA, recieving tax credits and child benefits. I was involved in a RTA, which my two daughters (2 and 5) were in and my wife. I understand the rules about the 6,000 and 16,000 barrier. But I wanted to ask if the compensation we receive would be added up altogether or would they class my children’s/ wife compensation separate to mine. Altogether, It would be around circa 12,000 compensation.

    • Mark Thompson says:

      Any compensation for the children should be the subject of an application to a court, for approval of the settlement. That approved compensation will be held by the court until your child reaches 18 years of age. Compensation controlled by the court is ignored for benefit purposes.
      Compensation paid to your wife and yourself will be added together, as the money you can hold for benefit purposes is calculated on a household basis, not individual.
      Depending on the amount of compensation you each receive, it may be that only one of you need set up a trust.

  17. Jessica says:

    Hi I’m currently on universal credits as I’m on maternity leave
    I had a rta in 2016. Went into universal credits on jan 2018

    My compensation will be paid in next week or 2 which is £2,000

    Just wondering if my universal credits will be affected and if I need to do anything

    • Mark Thompson says:

      Add up all money held by those in your household with whom you claim Universal Credit. Add in the £2,000 compensation. If the total is below £6,000 your Universal Credit will not be affected.
      You can find a useful explanation here.

  18. Steve says:

    Hi, I’m due to receive £61k compensation, I understand that I will need to set up a trust fund to still receive benefits. I am disabled from the accident I had so am on benefits, I have 4 children under 7 as well. Is there a limit on what I can ask the trust fund to pay for? ie, can I buy cars and other high value things? Thanks

    • Mark Thompson says:

      In the simplest terms, the trust can make any purchase, provided the purchase is made direct from trust funds.
      The trust should not be used for the expenses for which benefits are intended. Benefits are intended for the ordinary expenses of daily living such as food, clothing, footwear, gas, water and electricity bills, rent and mortgage interest.

  19. Vivienne says:

    Hi my dad is 92 and receives council tax and housing benefit, he’s due compensation for an accident for the sum of £11,200 will he lose his benefits completely or will he get a reduced amount?

    • Mark Thompson says:

      For those over 60 years of age, savings of £10,000 can be held before benefits are reduced. The upper figure for savings is £16,000. between those two figures the government assumes you receive £1 per week for every £500 of savings (or part of £500) you have above £10,000.
      Is your father entitled to Pension Credit. There is a useful calculator to check benefit entitlement at https://www.entitledto.co.uk/

  20. Mark says:

    Hi I work full time roughly making 17k a year. My partner is a stay at home mum of our two young children. We get child tax and child benefit and some working tax credit (not much though). I have a claim against my workplace at the moment after I had a accident earlier this year. Not sure what figure I’m looking at, but looks like possibly anywhere between 2k to 10k, I am back working now (can’t afford to be off). Would this claim affect the child tax credit or child benefit we receive?

    • Mark Thompson says:

      Child benefit is paid where income is below £50,000.
      Tax credits are based on your income, compensation not being treated as income. It is only the interest you earn on the compensation which will form part of the tax credits computation. More details about tax credits and compensation trusts here.
      In your situation, think ahead to see if you think reliance on means-tested benefits in the foreseeable future. That decision probably depends on your job security. If benefits may be necessary, set up a trust now to keep your options open.

  21. RACHEL DAWES says:

    Hi can you access money at any time if it is in a trust and spend it as you wish.

  22. RACHEL DAWES says:

    Hi,if you have been claiming means tested benefit, working child tax credit, do you have to pay this back if you got paid compensation.

    • Mark Thompson says:

      You might be asking if child tax credit is recovered under the recoupment regulations. The answer is no. The recoupment system is explained here.
      If you only receive child tax credits, you may be wondering if your compensation should be held in a trust. The tax credit is based on your income. Compensation received is not income, so does not affect receipt of tax credits. If you earn income on your compensation, that income will be relevant to tax credits. You can read more here.

  23. Harriet Kelly says:

    80 yr mum broke hip twice WHILE in 2 hospitals. Ended up having 3 ops. This tipped her into full blown dementia and had to go into a home. If we sue, will they take the money to pay for care? She currently has about £8000 in Bank, no home owned and brings in £400 a week in pensions and attendance allowance. Care home costs £425 a week.

    • Mark Thompson says:

      If the compensation takes your mother’s total funds £23,250, she will have to contribute from this capital. The answer is for your mother to set up a trust to receive the compensation. The compensation must then be ignored by the local authority.
      Useful information available on the Age UK website.
      As there are variations in rules in UK countries, do check the website of the local authority responsible for the care, as some council websites are very useful.

  24. Stacey says:

    Hi im a single mum of 2 on benefits im due to recieve 7750 i owe about 2000 out to family will i still need to set up a trust?

    • Mark Thompson says:

      If you have no other funds, you could talk with the benefit agencies, to see if they will accept that repayment of family debts is a legitimate expense. I think agencies will not accept such expenditure as reasonable, as anyone on benefits could claim they owe money to family members.
      If agencies say no, you have lost nothing and can then set up a trust. Do avoid any expenditure until the trust is set up and repay those family debts direct from the bank account set up by your trustees.

  25. Thahara says:

    Hi i am a cancer patient I was in reciept of hb and ctb when I received a critical illness pay out of 100k I stopped hb and ctb once I received the money paid full had extra expenses after a year now that the money has been finished can i claim hb and ctb?

    • Mark Thompson says:

      Some insurance payments made in respect of a personal injury can be held in a trust.
      If you have capital above £16,000, your housing benefit and council tax reduction will stop. The benefit agency will look at the money you had and decide if you have deliberately deprived yourself of that money so you can claim benefits.
      Where a person is treated as having capital because s/he deliberately deprives her/himself of funds in order to obtain housing benefit, the rule of ‘diminishing notional capital’ applies. This means that the amount of notional capital is reduced by the amount that the claimant would have received in housing benefit had s/he not been treated as having that capital. There is a good explanation here.

  26. gordon says:

    im on esa and dla if i get compensation ove 10,000 would buting a car to improve my quality of life be classed as squandering
    also paying of debts would be priotity

    • Mark Thompson says:

      There is no list of what payments are acceptable to benefit agencies and which are considered as dissipating your assets. The only safe advice I can give you is to set up a trust and then buy the car and pay off debts from the trust.

  27. Mr Colin Brunell says:

    I am 71 in 2000 I received £8k my wife £3 k for an Rta
    We are on housing benefits and council tax benefits.
    Including the rat payment we have atotal of £12 in savings.
    We both received d l a and pension saving
    The council now say they need to see a paper trail back to the date of the R t a payment.
    I did inform all parties back in 200o but housing say they have no record.
    Any advice and help would be welcome.

    • Mark Thompson says:

      You need to go back in time to when you first claimed means-tested benefits. How much capital, including the compensation, did you have then and was it declared?
      As a pensioner you are allowed savings of £10,000 before a reduction is made to housing benefit, but before that point you are only allowed £6,000.
      Do you claim Pension Credit, as that may be the answer to your entitlement issue.
      If your savings are reducing your benefits, you could set up a trust for personal injury compensation now, but it will not help retrospectively. You would also have to show the compensation has been retained.

      • Mr Colin Brunell says:

        Many thanks
        In 1972 I was told due to being a Haemophiliac I should stop work. I am terminally ill.
        So it was since then that we were on Benefits
        My wife has Alzheimer’s N stage. Terminal.
        We do not now get pension credit why I do not know but have been put on pension savings.
        Back in 2000, was the insurance who paid out obligated to report to the benefit authority as today.
        Would it be best to just say the £11k can be looked on as savings.
        I am extremely greatful for your taking time to advise me
        Ps we have no independent private pension,or income.

        • Mark Thompson says:

          An insurer making a compensation payment must inform the DWP of the payment and, in addition to your compensation, repay any benefits you received as a result of the accident in question. After a road accident the insurer has a similar responsibility to make repayment to the NHS for the cost of treatment. These obligations existed in 2000.
          The notification by the insurer does not satisfy your duty to tell benefit agencies of a change in your financial circumstances, that duty being personal to you as a benefit claimant.
          I do not think it is sensible to accept the compensation should be treated as savings. That opens the door to an argument you have been overpaid benefits for years past. If the compensation is identifiable, hopefully saved in a separate account, I suggest you set up a trust now to protect your benefit entitlement going forward. I have known benefit agencies to look kindly on cases such as yours, but I think you have to legitimate the position before hoping for such a response.
          A useful website to help with benefit entitlement is https://www.entitledto.co.uk/

  28. Manda says:

    My partner received a sizeable compensation award following a accident at work in 2015. He set up a PIT and was able to buy a house outright with the money through the trust. Now he’s unable to work due to the lasting disabilities left by the accident and has successfully claimed ESA and had a PIP award since then. We are moving in together, I’m moving in with him and we qualify for universal credit as even though I work, we are still eligible. Now my question is, as we need to make a new joint claim, how do we class the housing question as he does own it outright but technically the trust owns it. So how do we indicate via the claim that it’s not eligible for consideration.
    Thanks in advance

    • Mark Thompson says:

      Property which is your main house is not taken into account when assessing entitlement to Universal Credit.
      If you think you are being asked about the house in which you live, there is no harm in stating it is owned by a personal injury trust, but I do not think that is what you are being asked.

  29. Hello, I am about to get a settlement for 31,815.35 but I am on disability I get soical sercuity and SSI and they want to pentalize me and take my settlement so what can I do to keep my disability and my settlement

    • Mark Thompson says:

      Hi Rose,
      Your position sounds like a clear case for a trust to hold and use your compensation separately from your personal funds. A trust is the only legitimate way to keep and use compensation and keep your benefits. To see how i work please visit this page.

  30. Sam says:

    My ex-husband and i seperated 9 years ago. For the 1st five years he paid no child maintenance for both his children, as he was self employed. And he refused to pay it anyway. When he became employed, I was able to put in a claim for child maintenance. I received this for 2 years. He then suffered an operation error after a hospital operation which means that he can no longer work. I think that he is making a claim for compensation. If he wins, My question is, am I able to make a claim for the years that he missed child/maintenance payments and also am I able to collect future payments until my children are 18, from his compensation claim amount?
    Look forward to hearing from you.
    Many thanks

    • Mark Thompson says:

      Divorce and divorce finance is not my area.
      The only thing I can tell you is that personal injury compensation used to be irrelevant in divorce, save that part of the compensation paid for earnings loss. That £rule” is less strict now, so all compensation can be taken into account in a divorce. However, a Court may take into account the reasons why the compensation wa spaid, so will take a more restrictive approach than it might towards someone with a genuine windfall in their hand.
      The best thing I can suggest is to contact the solicitor who dealt with your divorce, or the Child Support Agency if they were involved in maintenance.

  31. Gemma says:

    Hi I’m a single mother currently on JSA, child benefit & child tax credits at the moment. On Boxing Day I was hit from behind whilst being stationary as a passenger driver. I suffered injuries to the right of my neck . I have put in for a personal injury claim. I have been offered a reward of 1,300. Do I need to inform dwp of this reward? I’m worried my benefits will stopped When I am better I was looking to pay off my driving lessons

    • Mark Thompson says:

      I will assume the offer is a final settlement rather than an interim payment.
      Forgetting the compensation, check how much money you have. If you then add the compensation, are you anywhere near £6,000? If well below £6,000, you do not need a trust, as there is not enough compensation to warrant the protection of a trust. By all means tell benefit agencies once the money is received, as your financial situation has changed. If you have done your sums correctly, there will be no problem.
      If the offer is an interim payment and you expect a much higher final settlement, we can think about setting up a trust now, so everything is tidy and your benefits will be protected.

  32. Vic says:

    Hi I work part time so get some housing benefit and working and child tax I’m due to get roughly 10000 for a rta will I need a trust? And how does a trust work will I be able to withdraw money from it at any time? Thanks

    • Mark Thompson says:

      The benefit regulations, quite generously, allow you to keep your benefits and personal injury compensation.
      The trust for compensation operates separately from your personal funds and should not be used for the basics of life, that being the role of your benefits.
      As the compensated person, you must not have personal access to the trust fund, although you can be one of the trustees. Expenditure from the trust should be direct, the compensation not passing through your hands or personal bank account. You might think this a nuisance, but compared to losing benefits, it is a nuisance worth putting up with.
      There are some Q and As here which will help you.

  33. Kath Webster says:

    Hi, I’m due to receive a considerable amount of compensation due to a RTA. I’ve opened a trust fund to store the funds in as advised. My question is dwp are going to recover around £25,000 of benefits already paid to me. If money is being kept in TF to secure my benefits why do I have to pay this money back. I was claiming the benefits long term before the accident.

    • Mark Thompson says:

      The trust is designed to protect the compensation you actually receive.
      Quite separately from the compensation you receive, the party paying the compensation, usually an insurance company, must repay to the government any benefits you have received as a result of the accident. They also have to repay the cost of your NHS treatment after a road accident. I say again, these liabilities are quite separate from your compensation.
      Within the calculation of your compensation, you have to give credit for certain benefits you have received. As examples you must give credit for ESA received against the wage loss element of your claim, or give credit for the care component of DLA against the care element of your claim.
      These points are covered by the recoupment regulations which you can read about here.

  34. Chlo says:

    I am due to receive compensation of 22000 for sexual abuse suffered as a child. I’m a single mum of 2 and baby on way. I claim income support, child benefit, child tax and housing benefit.. How is this all gping to be effected? Will all benefits stop?

    • Mark Thompson says:

      Receipt of £22,000 will stop all of your benefits. Ignore all the nonsense about spending it within 52 weeks and set up a trust.
      The benefit regulations specifically allow personal injury compensation to be ignored, provided it is held separately from your personal funds in a trust. This is a generous provision, sometimes thought too good to be true, so the best and obvious course is to take advantage and set up a trust. The way I work and my fixed fee are set out here.

  35. Ed says:

    Ok thanks for that. However, should being a trustee become too onerous, can i revoke the role? Also are there any particular terms i might expect to see in the trust which lessons my responsibilities, ie. being expected to invest the money etc? I am happy to write cheques for the beneficrary when requested but not a lot more.

    • Mark Thompson says:

      A trustee can retire/resign.
      A trustee can only be criticised by a beneficiary. If you are a trustee of a bare trust which holds compensation, you could work with the beneficiary and avoid the role becoming onerous.

  36. Ed says:

    Hi, i have been asked to be a trustee for a friend on means tested benefits. Does being a trustee for a large amount of money 100 – 200k affect my own ability to claim benefits in the future? If i need to can i revoke my role as trustee? Thanks

    • Mark Thompson says:

      If you are a trustee, you are not treated as personally holding the trust fund for tax or benefit purposes. You are holding the trust funds in the capacity of trustee, so it is not yours.

  37. Kathleen Dixon says:

    Hi I receive housing benefit and CT benefit. Wtc and Child tax credit. I received 10k in compensation for a RTA injury this included expenses. I have no savings and I owe 3ķplus interest to my auntie as she loaned me the money to get a car pay insurance and car seats.How much of this will they take into consideration when reducing my benefits and what benefits will they reduce. Thanks

    • Mark Thompson says:

      Your housing benefit and council tax reduction are means-tested benefits and will be reduced by about half, as you will hold funds above £6,000.
      benefit agencies will agree that repayment of loans is acceptable, but they do not like loans from friends and family. They may suspect this is a mechanism to tuck the money away and keep your benefits.
      They may not live with the costs associated with buying a car either.
      All personal expenditure you make is subject to benefit agency assessment. If they do not agree the expenditure is reasonable for someone on benefits, you will be treated as still having the money, which may reduce your benefit entitlement. The money spent is treated as notional capital.
      You can talk to your Council about it, but I suspect the answer will be this expenditure, or a good part of it, is not acceptable for someone in receipt of benefits.
      If you make these payments from a trust, there can be no objection, so I think a trust is the best route.

  38. William says:

    I am a disabled person. My parents have set up a trust to leave there money to me once they pass away. Am I still able to set up a personal injury trust..

    • Mark Thompson says:

      Yes. If you receive personal injury compensation there is no reason why you cannot set up a trust for that compensation.

  39. Stacey says:

    Hi my husband is possibly getting a personal injury settlement of £8000 and we receive child tax credits. Will we need to open a personal injury trust or not?

    • Mark Thompson says:

      If the household receives no other benefits, the answer is no.
      Tax credits are based on your income and compensation is not treated as income. Do take care there are no other benefits such as ESA, housing benefit or council tax reduction.
      For more information read here.

  40. William says:


    I am currently trying to caim compensation under the human rights act. Is it possible to set up a trust chould I be successful

    Many thanks

    • Mark Thompson says:

      The regulations for each benefit vary a little, but the basic rule is that compensation paid in consequence of any personal injury can be protected for benefit purposes in a trust.
      Compensation can include physical and psychological/psychiatric injury. Cases like yours can include these elements, so it is possible some of the compensation can be protected for benefit purposes by a trust.

  41. James says:

    Hi, I recieved a personal injury compensation, and have put it into a bare trust with the bank. My means tested benefits are not affected by this I know, but I would like to invest the money either on the stock market, or perhaps to buy property. Is this possible without my benefits being affected? Many thanks.

    • Mark Thompson says:

      Your trust should have been created with a trust deed, not just by opening a bank account.
      The trust deed will set out the investments which the trustees can make. Provided those investments are held by the trust, they are trust assets and will not alter your benefit eligibility.

  42. Manny says:

    Hi. I received a compensation payment for £5250. I have no savings and will use the payment to pay off my credit cards. I receive working and child tax credits. Will these be affected?

    • Mark Thompson says:

      If you only receive tax credits, receipt of compensation is not a problem. Tax credits are based on your income and receipt of compensation is not treated as income.
      You only need to think about a trust if you receive, or are likely to receive, means-tested benefits, a few examples being income-related Employment and Support Allowance or Jobseeker’s Allowance, Universal Credit, Housing Benefit and Council Tax Reduction.
      For more information about tax credits and trusts click here.

  43. Sheila Brown says:

    Hi , I am on lOng term sick leave and my employers are thinking of offering me a settlement. I am 62. Do I still get my occupational pension and does it affect Universal Credit? Am I treated as leaving work voluntarily?

    • Mark Thompson says:

      The best place to check your benefit entitlement is https://www.entitledto.co.uk/
      I suspect any settlement and the occupational pension will be taken into account when assessing your entitlement to Universal Credit, but us ethe calculator on the link above to check.

  44. 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.

  45. 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.

  46. 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.

  47. 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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