Benefits are a lifeline for people who are struggling financially.
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
Here’s what you need to know:
Personal Injury Compensation And Your Benefits
If the benefits you claim are non-means tested
, you don’t have to do anything. Non-means tested benefits
are paid to you no matter how much money you have.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
How Personal Injury Compensation Can Affect Your Benefits: Example
• 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.