When compensation is awarded as part of a personal injury claim, the receipt of a lump sum payment may affect your entitlement to means tested benefits. If you already have savings (capital) of over £6000, any additional compensation payment will mean that your entitlement to Department of Work & Pensions (DWP) means tested benefits will reduce. Further, if the compensation payment increases your capital level to over £16,000, then you will lose your entitlement to benefits altogether.
The benefits that're currently means tested and are on universal credit are:
The benefits that are currently means tested and are not on universal credit are:
If you receive any of the above benefits, or you intend to claim them in the future, you should consider setting up a Personal Injury (PI) Trust. If you place your compensation payment within a PI Trust, then:
A PI Trust can be arranged for an interim payment or a final compensation award and must be set up as soon as possible once you receive your compensation, although the DWP allows a 52 week period within which to spend your compensation payment. Beware however of any suggestion that you have deliberately disposed of capital for the purpose of protecting your entitlement to benefits.
As a PI Trust is, by far, the best way of protecting your position, we strongly recommend that you set this up before you receive any money. We are happy to help you to do this, so please call us for more information.