How Does Compensation Affect Benefits?
Receiving a personal injury compensation payment could affect your eligibility for certain types of state benefits.
If you are in receipt of benefits and are making a personal injury claim, you can find a summary of what you need to keep an eye out for below.
Disclaimer: This guide outlines general topics you should be thinking about if you want to make a personal injury claim. But it is not legal advice. If you need legal advice, you should contact a specialist personal injury claim solicitor for guidance on your specific circumstances.
Will My Personal Injury Compensation Payment Affect My Benefits?
If you get benefits that are non-means tested, your personal injury compensation will not affect them. If your benefits are means-tested, your compensation could affect your eligibility. One way you can avoid any problems is by setting up a personal injury trust.
Many depend on them to put food on their table each week.
If you are successful in your personal injury claim, the compensation payment will be very welcome. But you won’t want it to disqualify you from receiving benefits!
If you are a benefit claimant, and you suddenly receive a large one-off payment into your bank account, the authorities are going to raise an eyebrow.
They might ask the question: “now that you have a lot of money in your bank account, do you really need those benefit payments anymore?”
And no, you can’t just decide not to tell them about your compensation.
Because not only are you supposed to tell your local Jobs & Benefits Office about changes in your financial circumstances, the defendant has to tell the Compensation Recovery Scheme about your payment. (We’ll talk more about the Compensation Recovery Scheme later.)
So it’s not as if they won’t find out. The authorities know about your compensation before you even receive it.
But it’s not all bad news.
If you handle it right, there’s no reason why you can’t keep both your personal injury compensation payment and your benefits.
Here’ what you need to know:
Means-tested benefits are payments you only get if you meet certain financial requirements. If you earn a salary or have savings above a certain amount (or own property), you might not be able to get means-tested benefits.
Means-tested benefits have financial limits. If you exceed those limits, you are no longer entitled to claim the benefits.
People sometimes find that getting a large payment for a personal injury puts them above those limits.
And what happens then?
Exactly – they can’t claim the benefits anymore.
- For the Income Support benefit, one financial limit is £16,000 in savings. So if you have more than £16,000 in savings, you can’t usually claim Income Support.
- Before your personal injury claim, you might have had £7,000 in savings. You were under the limit, so you could get Income Support.
- But – imagine you have a successful personal injury claim. You get a compensation award of £16,000.
- That would mean that you now have £23,000 in savings – way above the £16,000 financial limit.
- So…now you’re outside the limits and you are no longer eligible to claim the Income Support benefit.
Who thought that getting a compensation payment would cause so many problems!?
The good news is that there is a solution to this.
It’s called a personal injury trust – which we’ll look at next.
The above article is part of our guide on how to make a personal injury claim in Northern Ireland.
If you are thinking about making a personal injury claim, you should get in touch with a Northern Ireland personal injury solicitor who will help you assess the strength of your case.
If you have any questions, you are very welcome to get in touch.
All the best,
The Team @ Lightlaw
Every effort is made to keep this guide up to date. Although it is not to be regarded as legal advice, we strive to make sure the information is helpful, accurate and practical. If you are a Northern Ireland personal injury solicitor and have spotted an inaccuracy, you can submit a suggested change.