Will claiming compensation affect my benefits claim?

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If you currently receive state funded benefits, such as Universal Credit or similar, making a claim for personal injury compensation could affect your benefits entitlement and the amount of benefit payment that you receive. Benefits claimants are only allowed a certain amount of savings or income before they would be deemed to have too much to claim full benefits, or even reduced benefits. This is currently set at £6,000. Therefore, if you have savings of £6,000 or if you receive compensation that will see any savings you already have exceed £6,000, your benefits may be affected.

The current savings threshold at which means-tested benefits stop is £16,000.  However, as stated all savings above £6,000 will affect the amount of benefits you can receive. Benefits which may be affected include universal credit, housing benefit, and council tax support.

Compensation settlements paid directly to a claimant are seen as savings and must be declared if the total exceeds the threshold.  Of course, unless you know how much personal injury compensation you will receive, it is impossible to answer exactly as to whether or not your benefits claim would be affected.

The amount of compensation

The majority of personal injury compensation settlements settle at a relatively low value of £3,000 or under. 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. However, in claims where the claimant has been more severely injured and the value of any claim has been maximised by an expert solicitor, a claimant would likely be pushed beyond the income bracket in which benefits claims are assessed.

Most people would think it is fair enough that if you become ‘wealthy’, even if via the misfortune of having to claim compensation for an injury, that you should no longer get benefits – they are, after all, for people on hard times. However, if you had a huge settlement of millions, it wouldn’t really matter. Where it is a problem is when people receive smaller settlements of say £10k or £20k. Whilst 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.

Seek advice for your particular situation

Anyone injured in a non-fault accident should pursue their legal right to seek compensation regardless of any benefits they receive. At Direct2Compensation, we can help you to understand whether claiming compensation could have any undue effect on your existing benefits claim. Our specialist Solicitors are experts in ensuring that the claimant gets the best outcome from their claim and they would seek to help you to ensure that any compensation settlements have a minimal impact on any existing or long term benefits entitlements.  As such, it may be that you will need to be linked with specialist financial advisers in order that any larger settlement values can be handled in the most tax efficient way such as a personal injury trust.  Our Solicitors can assist with this to ensure that any settlement is dealt with correctly and legally within the tax and benefits system to not disrupt or damage any existing claim for benefits.

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 send us your details via the contact page, we’ll be happy to discuss your circumstances in confidence and help you to better understand your situation.

Be smart with your claim

We don’t feel that it is fair that a personal injury claimant has to sacrifice an existing income in order to obtain compensation for the injuries or losses that they sustained as a result of someone else’s negligence. Of course, it can be the case that a claim value is extremely high and the level of damages paid out would take care of all future requirements of the injured claimant for the rest of their life and that benefits entitlements do not need to be considered.

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.

A personal injury trust enables the claimant and their Solicitor to pursue the maximum compensation for their claim without jeopardising any means tested benefits entitlements, or miss out on any local authority care provisions. Any compensation settlement payment that is paid to a claimants bank account is the claimants money and will be seen in that light by the tax and benefits authorities.  However, any settlement paid into a trust do not need to be considered by the authorities when assessing any benefits entitlement.

A personal injury trust ensures that a compensation settlement is held separately from the claimants own finances and is created within the law by a Solicitor with at least three trustees to be appointed.  The trustees (one of which can be the claimant) will control the trust and how the compensation settlement within the trust can be spent.  Our Solicitors will help you to ensure that the people you choose to be a trustee can be trusted to ensure that they have the best interests of the claimant at the centre of their decision making when authorising any spend of or release of trust funds. Remember that our Solicitors can help you and that you shouldn’t let concerns about losing benefits entitlements stop you from making your claim for compensation.

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Questions & Answers

  1. charles

    I have just received a settlement for personal injury for 20k after deductions ongoing over the last 2 years How if any will it effect my Attendance allowance which started over the last 3 months The insurance claim for the injuries is not what i claim AA for , I understand AA is not means tested Do i need to inform DWP

  2. Natasha

    Hi. I’m about to receive £9,500 cost care of personal injuries. Should I be contacting the Dwp as I get help from universal credit.

    • Ian Morris

      It is always sensible and correct to contact the DWP when your finances change – even if due to the receipt of a compensation settlement. However, before you do contact DWP, it is sensible to speak with your Solicitor about your settlement and the options available to you.

  3. Nicola

    I am a single mother with 2 children and will soon be receiving a lump sum of £50,000 plus. I am claiming universal credits and council tax reduction. I am considering a trust however I really don’t know how to go about it. Also how do trusts work? Will I be able to access my money when I need to?

    • Ian Morris

      Your Solicitor should be able to assist you in the process of setting up a trust for your settlement, ensuring that you retain the maximum initial lump sum (so as not to impact your benefits entitlement). If you have a good relationship with the Solicitor who has handled the claim for you, you can appoint them as a trustee. If you don’t have a Solicitor, you should make an initial free consultation appointment with a Solicitor to discuss setting up the trust and they will guide you through the process and cost.

      Once the trust is set up, the trust – of which you can be a trustee – will control the funds within the trust and can release them accordingly for items of need and living costs etc.

  4. Dawn

    I am anticipating receiving around 10k in compensation I have 10k of debt if I pay off my debt does this count towards savings thank you

    • Ian Morris

      If you can demonstrate your debt and evidence that you are settling the same, it should not cause you any problems with regards to thresholds.

  5. Tina

    My mother is due to receive about 14k compensation for an accident at work (after lawyers fees), she sometimes recieves universal credit to top up her earnings, but is not currently recieving them. However this is money that she owes me, so she was going to pay me directly after she banks it. Will this effect her universal credit in the future? Does she have to declare that the money was there even if it will be out of her account again straight away?

    • Ian Morris

      It is always sensible to make sure that the benefits authorities are fully aware of any money coming in or out of a claimants account. In this situation, I don’t believe the settlement would have any impact on her entitlement and she should not be concerned.

  6. Ashley

    Hello, I am going to be receiving a sum of around £32,561 I am going to set up a trust but have a query. I am a student and soon to be getting my maintenance loan of £4495 which may drop the same time as the funds for my compensation being available. DWP are aware of my student status my question is if it all drops around the same time and I want to take some of the compensation money for me do I need to keep the combined amount under £6k or can I take under £6k from my compensation even though I’m getting near £5k from SFE as compensation should be disregarded for the 1st year and most of the money once in will be going out on bills and treats for myself and full under £6k once bills and such paid out? Also is the £6k a month or in genuine you can’t have more than in savings like say I spent the SFE money one week then took £5k from my compensation money the next will that work?

    • Ian Morris

      We would advise that you discuss this slightly unusual situation with the DWP to ensure you do not fall foul of their criteria, but we believe that you will be fine based on the details provided.

  7. Andra

    I read here that if its £3000 won’t affect your benefits. But the settlement i received was as follows: treatment costs £282
    Additional damages £ 2.303.00
    Interim payment £ 1,799.00
    So the final settlement is 4,585.00
    What is next with the universal credit,what will happen, will I have to pay them the money back? Im so worried that I feel sick.:(
    Thanks in advance

    • Ian Morris

      As your settlement is below £6000, you should not have any issues.

  8. Emma

    Hi I got awarded compensation through the courts for the sum of £56.000 my solicitor said I had to pay back esa £2000 out of that then once he took all his fees and expenses I didn’t receive a penny, should I have payed esa the £2000 if I didn’t receive any of the compensation?

    • Ian Morris

      Until you have formally ‘banked’ your settlement, you are not in receipt of funds, so would not have to repay the benefits authorities until you have the funds in your bank.

      • Emma

        Hi thank you for the reply, as my solicitor already payed the benefit department and then took the rest of my compensation for himself have I got grounds to ask benefits for the money back?
        Kind regards

        • Ian Morris

          Your situation seems unusual and it is one we would recommend that you discuss with both the benefits office and also with the regulators covering the Solicitors in question – the Solicitors Regulatory Authority and Legal Ombudsman Service so that an independent review of the costs charged to you by your Solicitor can be undertaken.

  9. Kate

    Hi there, I was in a car accident almost
    3 years ago and I’m just about to get my settlement. It’s almost £8000 but the layers are taking their 20% before paying me the rest. I think I’m going to be paid about £6135.

    I’m on working tax credits and child tax credits and really don’t want to be put onto universal credit automatically. I don’t know if this payment will trigger it?

    Around £500 of the money is reimbursement for the car seat I had in the accident and the chiropractor I went to afterwards. Almost £900 is for CBT therapy for anxiety I was recommended get but haven’t booked yet due to not having the funds yet.

    Will the DWP see this as I got £8k savings despite the fact £2k went to the lawyer and about £1.5K is for refunds/future medical treatment?

    • Ian Morris

      Of course, you should always be open and honest with the DWP regarding your financial situation. However, in your case you appear to be under the £16k threshold if you include savings and settlement, so you should be ok.

  10. Aram

    I am due to receive £20,000 compensation for unlawful detention from Home Office , and i am on Universal Credit full benefit. Will the compensation affect my benefit as it is not injury claim or compensation?.

    • Ian Morris

      You need to discuss this with the Benefits office that deals with your UC claim.

  11. Danielle

    Hi was in a car accident in 2014 that resulted in me needing spinal fusion. I was awarded a settlement for £40,000 and I put that in a personal injury trust. I used that money towards a deposit on a house.
    Unfortunately I had serious fall in 2017 that wasn’t my fault and it resulted in another surgery to my neck and because of this I ended up being medically retired from work. I’ve recently been awarded £20,000 and I’ve been told I can put it into my existing personal injury trust providing I’ve got a copy of my solicitors letter to support the injury compensation. Is this correct? I’ve got to pay back any sick pay I received but I’ve not been made aware I’d have to pay back any existing benefits I’m receiving. Do you think I would?

    • Ian Morris

      If your settlement is placed in to trust, the value of the settlement should not be seen as your own personal finance and that should not impact on any benefits that you currently receive.

  12. Sarah

    I am in receipt of ESA and DLA benefits. I have recently won compensation of £30 000. Which benefit department do I report this too. Do I have a year to invest this without my benefits being stopped. thanks. Sarah

    • Ian Morris

      Did you have a Solicitor acting for you in your claim? If so, they should be able to assist you with setting up a trust to ensure that any impact to your benefits entitlement is mitigated.

      In terms of declaring the compensation, you should contact the Department for Work and Pensions.

  13. Cranlee Hobbs

    I had a injury some time back which has left me permanently disabled. I applied for and received a personal independence payment (PIP) to assist with mobility and care and continue to do so. Recently after several years I have managed to get an injury payment from those who did not treat my injury adequately. I am told that this payment would be subject to CRU payment – i.e. payment of benefits received. I am confused as to why this payment needs to be made, because I will continue to receive the PIP award going forward.

    Is this correct, am I liable to payback the PIP from date of first received to injury payment especially when my understanding is that the PIP has been awarded due to my mobility and care needs which will continue and potentially increase as I get older?

    • Ian Morris

      Much will depend on the amount of compensation you will receive and whether that money is paid directly to you or placed in a trust. Before you accept the settlement, you should seek specialist advice via your Solicitor or a financial planner as it would be worth delaying receipt of the payment to ensure that you can minimise the impact on any benefits entitlements or the requirement to reimburse the DWP.

  14. SPum


    I had an accident 5 years ago which left me severely injured, in a coma and with permanent damage in my knee, I received an offer from the insurance company for 300k and my solicitor is seriously putting pressure on me to accept it, in all fairness I always thought my claim was worth around 500k, how do I know if it’s the right thing to do? how do i know if i can trust him? I also received an email form him asking me to take liability for the accident as the insurance company was being charged a significant amount to the council for my hospitalisation is this a normal request?
    Finally, if I accept the offer I have been told it will just be transferred into my account next week, I don’t need to sign anything, is this also a normal procedure?

    I would really appreciate some advice, even if I have to pay lawyer fees, I am even considering changing solicitors.

    thank you

    • Ian Morris

      The offer on the table is clearly a considerable sum of money. This indicates that you were seriously injured and have a considerable loss of income element to your claim. Your Solicitor should not advise you to accept the offer unless they can provide opinion from Counsel (Barrister) that shows the offered sum is appropriate. You should ask your Solicitor for written evidence that the offer is acceptable. With regards to the lack of any signing for the award, that does not sound correct at all, especially the size of the settlement. Your Solicitor should be able to provide written evidence of the offer and request your signed approval to accept – they should also be making your contribution from settlement clear (in writing) to you.

  15. Kel

    Hi I am due a compensation from CICA which is £16,000 and would like to now if this will effect my benfits

    • Ian Morris

      Before you receive settlement, we would advise that you discuss the potential impact of a settlement of such an amount on your benefits entitlement with a specialist organisation such as the Citizens Advice Bureau. If you used a Solicitor to help you with your CICA claim, they will be able to help you with this. Alternatively, the CICA should also be able to offer you advice.

  16. James

    Hi, my mother has received a total of £8900 for a crash she was in. However, she claims PIP, income support and child tax credit. Is there a way around them not stopping her benefits?

    • Ian Morris

      Solicitors should be mindful of the potential impact on benefits entitlement that a settlement in a claim for personal injury can present. There are legal ways around the impact on entitlement including placing some of the settlement in trust etc. Your Mothers Solicitor should be able to link her to a specialist advisor who can help her in this area.

  17. Steven

    Hi I have been putting off going for a claim after I cut a tendon in my finger in an accident at work. I have had surgery to fix it, but the surgery didn’t work as well as hoped, so my finger now doesn’t move properly. I delayed making a claim as my partner said that her benefits would be affected as she doesn’t work.

    • Ian Morris

      Whilst benefits entitlements can be impacted by receipt of a compensation settlement, there are legitimate ways in which a claimant can mitigate the loss of any benefits and specialist Solicitors can assist successful claimants to obtain specialist advice and support in cases where a claim value may impact on benefits rights. However, in your case you have sustained a permanent injury that will impact on your dexterity and close motor-skills for the rest of your life and the impact that such an injury could have on your ability to work properly and earn as much as you may otherwise have earned surely outweighs whether or not your partners benefits rights are entitled! Our article on finger injuries will give you more information.

      Given the injury you have sustained, our view is that not attempting to pursue a claim is a short-sighted move and one you may well end up regretting if you allow your claim limitation period to expire. Our recommendation is to make contact with us as soon as possible and avoid any further delay in making your claim. You can call us on 01225430285 or start your claim here.

  18. Richard spate

    I have just had a payout for an injury and was wondering if it affect my universal credit pay, the amount was £1000.

    • Ian Morris

      The amount you mention is unlikely to impact on your universal credit payments and your rights under that scheme.

  19. stuart tranter

    I am currently receiving benefits for 4 yrs for my loss of earnings and not being able to work due to a hammer beating that severely caused my business to collapse and become immobile. I have a solicitor who is no win no fee but I’m so worried she says that I will have to pay back all of my compensation well most of it at least £60,000 of it. I have a loss of earnings claim and personal injury claim with this sols. I am on (mortgage payments interest only ) with mortgage holding off until claim comes through, I also receive PIP,ESA , my main worry and concern is that whilst I’m claiming if its true what she implies about benefits being deducted is this from loss of earning only or P I Claim? I live alone am worried I’m wasting my time if I then pay all the money back and still loose my home and concerned why my sols has not mentioned a personal injury trust that I have been told about that could protect my claim and benefits from being taken leaving me penniless.

    • Ian Morris

      It is true that benefits entitlements can be altered by receipt of a compensation settlement. However, your Solicitor should be able to assist you with wealth management advice as to legal ways of receiving your settlement in such a way that it does not reduce your benefits entitlement and allows you to receive settlement in a way that prevents you from losing out.

  20. Jonathan

    Hello I currently receive universal credit and I’m due a cheque for £1,077.90 in 2 days do I need to declare this?

    • Ian Morris

      We would always recommend that any compensation settlement or other income is declared to the benefits office in order to ensure that no restrictions are broken or breached. It is likely that your compensation will not impact on your benefits entitlement in anyway.

  21. Trina

    I was forced by my solicitor to accept £40,000 in compensation for an accident at work. It was a complicated case I am still awaiting a brain scan and a gondolin enhaced scan as it may turn out that I have a condition called aracnoiditis. If I do have this condition it will be as a direct result of mt accident. My accident at work was five years ago last April. With this condition some day you are absolutly fine and other days you are in agony. I was filmed by private investigaters helping my bulldog into my car and picking up a case of beer and putting it into my car. I use a walking stick some days and others I dont it depends how I am feeling on that day. A month before my court date the other side said they were going for fundamental dishonesty. I spoke with my solicitor and said I still wast to go to courte. At the begining of my cliam I was offered £40,000 to be accepted by christmas day. My solicitor said she could not advise me to accept the offer or jnot as we did mnot have a diagnosis. Idcclined the offer on these grounds. At four weeks before the trial I still wanted to go to courte I was not making my condition up the other side sent a letter stating that I was inteligent enough to have read about my simptoms and was making them up. As you can imagine i was furious and still wanted to go to courte I was telling the truth at no point did I say I always used my stick and could never pick up a case of beer or my dog. My soliciter said I had to accept the offer and it was to late for me to go to court on my own because all my witnesses were paid my my solicitor and they would not represent me as she feared she would not get paid if we lost on the grounds of fundamental dihonesty. I was not in any way fundamentally dishonest and when I read about this nbew law it said it diddnt apply when I made my claim so should not affect me anyway. When I told my solicitor she said this was not the case or my barrister would nhave told her it turned out and she addmitted to me she had not even read the act. Also the act stated that it should not be used to bully people and I was outright being bullied. I asked my solicitor to ask for an ajournment to wiat for my diagnosis and she said she could not when I checked the law on this it stated you could request an ajournment if you were giong t5o produce new medical evidence. I told my solicitor this and she still refused it was now only two weeks to the courte case I had no solicitor or any witnesses I emailed her and said I felt I was being blackmailed by both her and the other sides lawyers and under duress I wouls accept the £40.000. Out of this payment I recieved nothing and a bill from the 0other side for £1400 to vbe paid in sevweral days I did not have that amount of money and I have heard nothing from anybody since. I was told by my solicitor that I had to pay back my PIP and Idustrial injury benefit back which left me with nothing. I have a friend who has just been paid for an accident at work were he broke his leg and he hasnt had to pay these benefits bach only had to pay his sick pay and his esa back. I claimed statuary sick pay but have not claimed housing benefit or esa so was it correct that I had to pay all of my compensation back and the other sides costs leaving me oweing £1400 pounds ?.

    Yours Truly Trina

    • Ian Morris

      We cannot advise on the specifics of your case due to the lack of full understanding of the accident or claim. However, if you feel that your claim has been handled negligently and that your Solicitor has failed you, you may have grounds to seek redress from them. We would strongly recommend that you make a formal complaint to your Solicitor via their published complaints procedure, outlining the areas where you believe that they have been negligent.

      Once the complaint has been heard and responded, you could make contact with a specialist Solicitor to discuss a possible claim for professional negligence against your Solicitor.

  22. Monica

    I was injured in an RTA Oct 18. I have had numerous scans and tests. MRI shows legion to left ankle, which is quite painful and has caused weakness and buckling. I am in receipt of ESA due to severe arthritis of right hip. Can I set up a Trust? how much are the fees?

    • Ian Morris

      If you have a Solicitor acting for you in your claim for personal injury compensation, they will be able to link you with a qualified financial planner or advisor who would be able to assist you in minimising the impact of any settlement on any benefits entitlements, including setting up a trust or making appropriate investments.

      The costs of such services is not something we can advise on, but it would be wise for you to investigate such avenues.

  23. stephen

    I’m on esa support group and on pip but had a car accident the other day, am thinking of claiming whiplash injuries, do i have to tell the DWP about any compensation i receive? it is about 3000 a claim or less.

    • Ian Morris

      The reality is that your claim would not be of a sufficient value for you to have to disclose any settlement to the DWP. However, a specialist Solicitor would ensure that you were made aware of your rights and obligations and that if the settlement were to exceed any benefits threshold, that appropriate action was taken to ensure that you could receive settlement in such a way that the impact on your benefits entitlements was minimised within the law.

      We can help you with your claim for whiplash. Please call us on 01225430285 or let us know when you would like us to call you and we’ll help you start your claim.

  24. Robert

    I received in 1993 a6% award for vibration white finger for life although it wasn’t enough to entitle me to a pension. Over 20 years my condition has deteriorated and now I have been told I have carpel tunnel as well, I am 70 years old and claim housing benefit and council tax benefit. I have been told if I make another claim it will effect my ongoing claim for these benefits, could you please let me know if this is correct?

    • Ian Morris

      Any compensation settlement that is of a financial value that is above the allowable benefits criteria would need to be disclosed to the DWP and benefits could be impacted. However, Solicitors are used to assisting clients who succeed in a claim with financial advice that enables them to maintain their benefits entitlement whilst still receiving compensation via legally accepted methods such as trust funds and slow release of settlement amounts. We’ve an article on vibration white finger claims which might be of interest.

  25. Jack

    If I’m on benefits but my friend isn’t And I get a large some of compensation like £50,000 and had it paid in a cheque in a friends name and he put it in his account, will I still have to declare it or will it be ok as my friend isn’t on benefits and it’s in his bank?

    • Ian Morris

      It would be unwise to attempt to ‘cheat’ the system and not to declare any lawfully received compensation settlement. Further, what is to say that your friend won’t cheat you out of your compensation? We would not recommend the course of action you suggest.

      The concerns you have regarding a benefits settlement impacting on your benefit rights are common. You should discuss your situation with your Solicitor as they will have legitimate ways of minimising any impact on your benefits entitlements and will ensure that your financial situation is handled legitimately and that your best interests are served.

  26. Jana

    Hello. I can’t understand must I declare my injury claim after car accident, 4000£ in tax credit renewal or not? They send me a letter where I can see they estimated my income for about 3000£more then I have earned from all my jobs. I know how much exactly I have earned. But I don’t understand why there are a difference of nearly 3000£. May be they include my personal injury claim? But why 3000 not 4000. Thank you.

    • Ian Morris

      You should contact the relevant authorities to discuss this with them. There is a threshold amount under which you do not need to declare and you should speak with them to ensure that you are acting legitimately.

  27. Claire

    Hi I have been awarded 11000 compensation due to a sexual incident. I’m worried cos I claim house benefit tax credit and carers allowance. I do not want to go over what I’m allowed and scared now to claim this compensation.

    • Ian Morris

      It is important to remember that you are being awarded compensation due to having suffered emotionally and physically, especially given the nature of the incident that lead you to making your claim.

      If you have been represented by a Solicitor, they should be able to assist you with regards to making sure that your award is paid to you in such a way that it falls below the required threshold for disclosing the settlement sum to the benefits authorities. If you have acted independently and made a claim without representation, you should make contact with your Citizens Advice Bureau to discuss the settlement and how you can minimise any loss of benefits entitlements. Of course, you should disclose the sum to the authorities at the appropriate time, but not before you have sought advice.

      The whole point of compensation is to ‘compensate’ you – the victim of an upsetting incident. For that compensation to then see you lose any benefits entitlement (even if short-term), would then effectively see you not being compensated fairly.

  28. shakoor

    Good evening i am getting p.l.p and industry injury payments. I would like some information regarding about payout. Will it affect my payout?

    • Ian Morris

      Most benefits are means tested and as such, receiving large lump sums of compensation can have an impact on certain benefit entitlements. With this in mind, Solicitors that do settle claims for claimants that receive benefits will be able to discuss with their client as to the best way to avoid impact on benefits entitlements. In most cases, this will see a claimant receive a portion of their settlement initially and then have the rest placed in a trust fund that will enable them to draw down an annuity annually that will remain below the income level that would impact on their benefits.

    • Reenie

      I was in a car accident 1 year ago and recieved treatment ect I have been offered a settlement in the region of 4.5k, but not yet agreed or recieved this,our financial situation has changed were my husband no longer works so as I work part time now we have been advised to claim universal payment. I have recieved a certificate from the cru to say nothing is currently owed to them but my question is, will me receiving this payment reduce our benefit entitlement or am I better waiting until the claim is fully settled and paid before claiming our benefit entitlement and just struggling thro until then?

      • Ian Morris

        Your Solicitor should be able to help you make contact with people who can assist you with advice as to how to minimise the impact of any compensation settlement on any benefits entitlement you may have. Of course, receiving compensation should be compensatory for losses and injuries etc sustained, so if the compensation settlement is effectively lost in lost benefits entitlements, it would render the purpose of claiming compensation pointless.

        We would recommend that you speak with the benefits agency regarding your situation and discuss the potential claim settlement value and whether it would impact on your entitlement. Our initial view is that the amount you mention is UNDER the threshold, so it shouldn’t impact on your benefits claim – but again, we recommend that you discuss that with the appropriate people.

  29. Sherald

    I will shortly be receiving a compensation one off payment for harm (£10K) from my local authority while in their care as a child. I am age 60 and in receipt of ESA/PIP/HB and CTAX benefit. Will I have to declare this compensation to the DWP or will my compensation payment be exempt when it is paid.

    • Ian Morris

      You should declare any payment – although it is often done automatically anyway. The value of your settlement shouldn’t impact on your existing benefits entitlement but your Solicitor or legal representative should be able to link you to an appropriate financial advisor who can ensure that your settlement is paid to you in a way that doesn’t damage your existing position.

  30. Thomas

    Hi, I receive PIP and ESA benefits, I was in a road traffic accident a few months ago and I’ve now been giving an offer of £2200, my solicitor takes 15% of that so that leaves me with just under £2000, will any of my benefits be affected? I was on benefits before the accident (I wasn’t claiming benefits because of the accident) .

    I’ve also read about a trust fund, will I need this even though the road traffic accident claim is a small amount? Will I also need to inform the DWP of my successful claim?

    • Ian Morris

      With a settlement of that value, it is unlikely that you will have anything to worry about. You should double check with your Solicitor, but my view is that you need not be concerned.

  31. Karen

    Hi my daughter received £22,000 compensation for sexual abuse. She lived with her partner at the time and they are now separated. She has none of the money left, will she be able to claim benefits. She has 2 children

    • Ian Morris

      If your Daughter’s settlement has been used then it should not count against any benefits entitlements.

  32. Michelle

    I don’t get any benefits only child tax credit and Carers allowance Child benefit. I have got my renewal form from the tax credits, do I have to tell them how much money I have in the bank as got compensation from a accident in 2013?

    • Ian Morris

      It is important to disclose any requested details to HMRC and the tax credits authorities, but it is unlikely that your compensation settlement will have an impact on child tax credit and carers allowance benefit.

  33. david dean

    I am on cont.based e.s.a, p.i.p,my partner claims housing benefit and council tax benefit. I have been awarded £42,500 from a personal dust related industrial injury. Can you tell me if my,or partners benefits will be affected?

    • Ian Morris

      If you receive the settlement as a lump sum payment of £42,500 it could have an impact on your benefits entitlements. We would recommend that you speak with the citizens advice bureau and also ask your Solicitor to link you up with a financial planner in order that you minimise any impact that this settlement will have on your benefits.

  34. danny moore

    hi my mother had a fall at home due to work done by contractors and is due a compensation claim, she will receive after the solicitors have taken there fee just over £3000, do you know if this will effect her benefits, the solicitors have sent her something about putting the money in a trust but to do this she will have to pay out of the money another £650 so will leave her even less can you help, i was wondering if i could be a trustee for her.

    • Ian Morris

      Compensation settlements for previous/past losses and injuries are not deemed to be taxable income and I would therefore doubt that any such payment of £3000 to your mother would have an impact on her benefits claim – although I would stress that all financial sums held by a benefits claimant ought to be disclosed.

      In claims for compensation, the only sum that can be deemed as taxable would be the element of the settlement that provided for lost income that would usually have been taxed at the point of earning if one is a PAYE worker or via a self-assessment return for a self-employed worker. This would also apply to future loss of income if a claimant was left unable to work for a considerable time after the settlement were awarded.

      • danny moore

        Thank you Ian, what do you think about her having a trustee, would this help in any way what so ever?

        • Ian Morris

          I would say that at the level of compensation that you expect to receive and given the proposed cost of the trust fund, it is not really worth going down that route.

          Your Mothers Solicitor should be able to put you in touch with wealth management people who can offer best advice regarding how to protect a settlement value in the best way. Such discussions should not cost you – particularly when you are simply finding out what proposals or offers the financial people can make.

    • Tina

      Hi I receive pip, esa, child tax, housing/council tax, I am in the middle of a car crash claim and looking to receive about 16.5000 in compen due to excess damage caused I am wondering if this will effect my benefits and if so is it possible to have the money paid to someone else as a Trustee for me? Thank you.

      • Ian Morris

        Your specialist Solicitor should be able to arrange a suitable and legitimate way to have your settlement paid in to a trust in order that it does not exceed the threshold that can impact any benefits entitlement.

  35. Toni

    Hi I had a fall at work 5 months ago since then I have had lots pain in my back legs I am still at work but am struggling to do my job if I left would I be able to claim esa I am also a career as I have an disabled adult son

    • Ian Morris

      If you are forced to leave work on medical grounds, make sure you receive written evidence to support this requirement from your GP as any future benefits claim will require evidence to support the fact that you can no longer work.

      You may also be entitled to claim compensation for the injuries after the accident at work. You may be able to make a claim against the employer for the fall that you had and I would be interested in speaking with you about this. One of the great benefits of pursuing a claim for compensation is that you can not only look to receive compensation for the injuries, but also get rehabilitation therapies (such as physiotherapy or even surgery) provided at the expense of the 3rd party.

      In your case, whether or not you have a viable claim against your employer will depend on what caused your fall and whether or not the employer would be held responsible for your fall.

      Please email your contact number to me at: ian@direct2compensation.co.uk and I’ll call you so that we can have a discussion about your accident and I can then offer some advice as to your rights going forward.

      I look forward to hearing from you.

  36. Stacy

    I had new radiators put in by council sub contractors a few months ago. Twice one of them have leaked but the second time it completely flooded my home. (All floors sofas, skirtings, wallpaper and decoration) the assessor is coming round today to make a note of all damages, take pictures etc and they have already took full responsibility for the damage. The company will pay for everything damaged and I’m guessing the agreed amount will be paid into my account so I can replace what was damaged. My question is will this payment affect my benefits? Even though it will only be to pay for what was ruined. I am currently on income support and housing benefit and child tax credit.

    • Ian Morris

      Your situation is not a personal injury claim one, so it’s hard for us to assist. However, what you describe regarding the loss/damage of your personal possessions as a result of water damage, sounds like a straight forward home insurance claim. Of course, in this case there is a contractor and it is (I assume) their insurers who are going to replace your losses.

      In this case, I would think it likely that your items will be replaced on a like-for-like basis as most insurers like to work this way. As such, you may not receive any cash settlement whatsoever and instead have every item replaced with a brand new one. However, if the insures opt to make you a settlement offer and pay you in cash (these days likely to be a bank transfer), I can’t see how that would affect any benefits claims you may make as the settlement is simply to enable you to replace the items that have been lost.

  37. Jo

    I am about to receive 10.5k in compensation for an accident I had 3 years ago.
    I was made redundant last september and when I claimed I was put on ESA, It is Income related due to my partner being on the same claim and I have just been put in a support group (not work related)
    I have no other savings.

    I have 2 questions.

    Would I have to pay back the ESA I have already received?

    Will my benefits change?

    Sorry I am just worried as i’m already struggling to pay my mortgage as it is.

    Thanks in advance.

    • Ian Morris


      It is very difficult for us to give advice in this situation as we don’t know the full details of your situation or the nature of your compensation settlement.

      I would strongly suggest that you take advice from the Citizen’s Advice Bureau and also speak to your Solicitor. In most cases, your Solicitor should be able to refer you to a financial planner who will be able to ensure that any settlements you receive are received in the most tax efficient manner.

      I hope that this helps.

  38. liz

    I got large payout ten years ago but now on pension age small pension, can I get pension credit or will my compensation left reduce my claim I have 35 grand left?

    • Ian Morris


      Given your situation, it would be best for you to seek the specialist advice of a chartered financial planner or go and speak with the Citizens Advice Bureau as they will be best placed to properly assist and guide you.

  39. Patricia

    I am currently receiving universal credit and due a large settlement within the next few months. Will i have to pay back the benefit i have received out of my settlement?

    • Ian Morris

      This is a complex issue to explain and very difficult to do properly by way of a comment without knowing the full details. What I can say is that if you are receiving benefits to enable you to live as a result of being unable to work, your Solicitor will be able to help you find the most efficient legal ways to receive your settlement without it having an undue effect on your benefit payments.

      Clearly, the compensation you will receive should be compensation rather than simply to replace benefits. However, if you have over a certain threshold of money, your benefits can be reduced or removed. To this end, Solicitors can help you look at ways of having the settlement paid in to a trust fund or similar so that you can receive some of the money at first, then the remainder in instalments so that it doesn’t impact on your usual benefits receipts. Of course, each case is different and as such, I would strongly recommend that you speak with your Solicitor – who knows the full facts of your situation and settlement amount – to get specific advice that will aid you with the way you opt to handle your settlement.

      I hope this helps.

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