Tuesday, 4 November 2014

Hodge Jones & Allen: I have received damages from a personal injury claim, will it affect my benefits?

The short answer is potentially yes, if you are on “means” tested benefit. This is where the DWP or Local Authority assess how much money you have in order to determine your eligibility for certain benefits.

Examples of means tested benefit for now are as follows: (remember the whole system is being reviewed so just be weary of the upcoming changes)

  • Housing Benefit
  • Council Tax Benefit
  • Income Support
  • Tax Credits
  • Employment Support Allowance
  • Local Authority care and support

Compensation from an injury claim is disregarded for one year. After that, most benefits start to be reduced if you have capital of £6,000 or more. If you have over £16,000 then the likelihood is that you would lose all means tested benefits. So, plan ahead and save yourself with any potential problems.

The receipt of a personal injury award is intended to compensate you for your injury. So, what can you do to protect your benefits? Well, you can create a Personal Injury Trust. The trust will look after your award and can enable you to retain your benefits and any additional support you are entitled to. The DWP will then disregard your compensation money when you are assessed for means tested benefits. 

Don’t forget to act promptly. You have to set up the Trust within 52 weeks from the date that you receive any payment to compensate you for your injury.  That payment may be an interim or final payment from an insurance company. It is therefore important to act promptly if you know that a payment is due.

Even if you are not currently in receipt of means tested benefits or support it may still be beneficial to set up a trust in case your circumstances change.

And lastly, there are no restrictions or rules on how you spend your money. It is your money and you can spend it on anything you choose.

Yousafa Hazara
Hodge Jones & Allen

No comments:

Post a Comment