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
Solicitor
Hodge Jones & Allen
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