If you currently receive state-funded benefits, such as Universal Credit or similar, making a claim for personal injury compensation could impact your benefits entitlement and the amount of benefit payment you receive. Means-tested benefits take into account income, savings and assets to assess your eligibility to claim. The current savings threshold at which means-tested benefits stop is £16,000, but any savings or compensation above £6,000 can affect the amount of benefits you can receive. This includes benefits like Universal Credit, housing benefit, and council tax support.
If you receive a compensation settlement exceeding the threshold, you must declare it as savings. But it’s impossible to determine precisely if your benefits claim would be affected unless you know how much compensation you’ll receive.
How much compensation will affect benefits like Universal Credit?
If you receive a compensation payment of over £6,000 for your injury, then this can affect your entitlement to receive Universal Credit and other benefits. However, many claims are settled for less than this amount.
For example, minor whiplash claims where an injury settles in 6-8 weeks would fall below this figure. If this was the case, a benefits claim would not be affected.
But in claims involving more severe injuries, the value will be maximised by an expert solicitor. Here, your settlement will be higher and push you beyond the income bracket for benefits claims, and you’ll likely see a reduction or loss of benefits.
Should you claim compensation if it affects your benefits?
In most cases, anyone injured in a non-fault accident should pursue their legal right to seek compensation regardless of any benefits they receive.
If you had a huge settlement of millions, it wouldn’t really matter if you lose your benefits. Where it is a problem is when people receive smaller settlements of, say, £10k or £20k. While it’s a lot of money, it’s not life changing and won’t last forever. Therefore, losing a chunk of or all of your benefits would be a real blow.
However, there are ways of mitigating the risk of a settlement affecting your benefits, and here at Direct2Compensation we can help you understand how to do this. You shouldn’t let concerns about losing benefits entitlements stop you from making your claim for compensation.
Our specialist solicitors can ensure that any compensation settlements have minimal impact on your existing or long-term benefits entitlements. In cases of larger settlement values, we can link you with specialist financial advisers to handle the compensation in the most tax-efficient way possible, such as creating a personal injury trust.
Use a personal injury trust fund to avoid losing benefits
A personal injury trust allows you to pursue the maximum compensation for your claim without jeopardising any means-tested benefits entitlements or missing out on any local authority care provisions. Compensation settlements paid into a trust are held separately from your finances, and the trustees control how the settlement is spent. This ensures that compensation settlements don’t count towards the savings threshold and don’t affect your benefits claim.
Our solicitors can help you appoint trustees who will have the claimant’s best interests at heart when authorising any release of trust funds. The trustees (one of which can be the claimant) will control the trust and how the compensation settlement within the trust can be spent.
It pays to be smart with your claim. Our solicitors will help you to ensure that you have access to the right advice and support so that any existing benefits claims are not affected unless the law requires them to be. Often they will advise that if you win your claim for compensation, you should agree to take a small settlement immediately (one that would not go above the maximum savings threshold) and that the rest should be placed in to a personal injury trust fund.
Let us help you start a claim
If you would like to find out a little more about how you could claim compensation after an accident and not lose your benefits entitlement, just drop us a line on 01225 430285, or if you prefer, . We’ve been helping claimants win compensation for over 28 years. We’re happy to discuss your circumstances in confidence and help you to better understand whether claiming compensation could have any undue effect on your existing benefits claim.