You may have the right to make a claim if you sustain an injury as a direct result of someone else’s negligence. The amount of compensation you receive will be based on the severity of your injury.
If you receive a lump sum as a result of a personal injury claim, it can certainly affect your state benefits, both in terms of what benefits you are entitled to and how much you can claim.
Means-tested state benefits take your income, assets and savings (“capital”) into account to assess your eligibility. The first £ 6,000 of capital is not taken into account when assessing your eligibility for state benefits. If your compensation for bodily injury is relatively low, such that your total capital remains below £ 6,000, your eligibility for benefits will not be affected.
However, if the value of your personal injury compensation, added to your capital, exceeds certain thresholds then this may affect the amount of benefits you can claim. At the time of writing, if receipt of compensation means you have more than £ 6,000 in principal, your state benefits will be reduced by £ 1 per week for every £ 250 held over the limit. £ 6,000. If your compensation means you have more than £ 16,000 in capital, you are no longer eligible for state benefits. Your benefits will be suspended until your capital falls below £ 16,000 when a new claim is due.
Which benefits are affected?
Any means-tested benefit may be reduced following the receipt of a personal allowance, in particular:
- Income support
- Universal Credit
- Employment allowance and income support
- Income-based jobseeker’s allowance
- Housing allowance
- Municipal tax assistance
- Pension credit
Benefits payable regardless of the level of capital available to you, such as Incapacity Allowance and Disability Living Allowance, will not be affected by any compensation payment.
What about government benefits received as a direct result of my injuries?
If you receive state benefits as a direct result of a work-related illness, these can be deducted from your compensation allowance and paid directly to the government by the insurer as reimbursement. This includes payments made under the Diffuse Mesothelioma Scheme and the Pneumoconiosis Act 1979 etc. (Workers Compensation). Please click here to read John Hall’s article on compensation and benefits for people with asbestos-related illness for more information.
The Compensation Recovery Unit (CRU), under the Department for Work and Pensions (DWP), recovers Social Security benefits in compensation cases and NHS costs in some injury cases. Compensators who receive a claim must send the CRU1 form to the CRU within 14 days to register the claim. A CRU Certificate will be issued and will indicate to the compensator which recoverable benefits and lump sums have been paid (or are likely to be paid) and the total amount to be reimbursed to the Secretary of State. Benefits can only be offset against the specific heads of loss to which they relate. The compensator will then be asked to make payments to the DWP CRU, if applicable, once the claim has been settled. , and the claimant may need to credit any benefit payments he has already received when calculating the personal injury claim.
Is there anything I can do to limit the impact of a personal injury settlement on my means tested benefits?
However, there are ways to mitigate the risk that a lump sum will affect your benefits. One option is to ask your lawyer to create a personal injury trust. Money invested in the trust is not taken into account when assessing your eligibility for state benefits. To learn more, please read Sarah Khudayir article on personal injury trusts.
For more information on Personal Injury Trusts and State Benefits, please call us at 0800 2800 421 Where contact us here.
