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.