The Effects Of Receiving Personal Injury Compensation On Your Welfare Benefits Entitlement

Discover how your solicitor will typically pay your compensation at the end of an accident claim; the welfare benefits entitlement criteria that might be affected by the receipt of compensation and how to ensure that personal injury compensation does not effect your benefit entitlement.

How do you receive your compensation payment at the end of your personal injury claim?

At the end of your claim, your solicitor will generally pay you your personal injury compensation by way of a cheque. The final figure you receive is subject to any agreed deductions.

Payment of this cheque into your account might influence your entitlement to benefits.

This will be dependent the government entitlement assessment criteria for the type of benefits you receive.,

What welfare benefits entitlement might be affected by receipt of compensation?

Type of benefits you receive

There are many different criteria for assessing your entitlement to benefits, which will largely depend on the type of benefits you receive.

Income and savings level

Some will restrict your benefits if your income levels are over a certain amount. Others will be affected if you have savings over a certain value. Yet others may combine both income and savings.

Check the government website for specific benefits entitlement criteria

Go to the government website to know the current entitlement criteria for your specific benefit. Type into the search box your benefit’s name. On the relevant webpage that appears – click on the eligibility link at the top of the page.

Is personal injury compensation classed as an income or a saving?

Compensation not an income

Personal injury compensation is generally not considered an income and as such is not subject to tax.

Money derived from compensation

However – money derived from the compensation could be considered an income.

Taxing of compensation payments

See our detailed article about whether compensation payments are taxable. We discuss the tax implications of receiving a compensation payment.

Compensation held in your account may be a saving

Clearly a personal injury payment for damages has not been saved.

However, so far as the government entitlement criteria is concerned – monies held in your account whatsoever the source is likely to be considered as savings.

What should you do if there is a risk your welfare benefits may be affected?

Check your welfare benefit entitlement criteria

You should check to see what the entitlement criteria for your benefits are.

Let your personal injury solicitor know your concerns

However, if your personal injury compensation is likely to be substantial – you should let your solicitor know your concerns at the beginning of your claim.

In addition – remind your solicitor as your claim approaches settlement.

Mechanisms your solicitor can use to ensure benefits are unaffected

There are different mechanisms for larger claims that can be put in place to ensure benefit entitlement is not affected or minimised.

The government when setting criteria for benefit entitlement cannot envisage all unknowns, such as the unlikely event of a large personal compensation payment.

It would not be their intention to penalise you when you suffer injury. However, such payments might automatically affect your benefits for the reasons already explained.

It is therefore totally legitimate to consider how a better structure for receipt of your compensation monies can be set up to ensure that benefits are still received.

Should you claim compensation if you are worried your benefits may be affected?

Yes – just let your solicitor know your concerns from the outset.

Right to claim compensation for personal injury

You have a right to claim compensation for personal injury whether you are receiving benefits or not. Subject of course to proving – you have suffered injury and someone else is legally at fault.

Waiting too long and you will miss the time period to claim

Many Claimants are fearful of the effect of personal injury compensation on their benefits,

Therefore – they do not claim or hesitate so long that they fall foul of the 3 year statutory limitation period. Making it too late to claim even if you should change your mind.

You should make your claim

We believe – if you have a claim for personal injury you should always make the claim irrespective of your benefits entitlement concerns.

In most cases – your compensation will be at a level that your benefits will not be affected.

In cases when your compensation proves to be substantial – your solicitor can help.

Generally – a structure can be put in place that will allow you to continue to receive your benefits or limit the effect on them.

SUMMARY Of Personal Injury Compensation And Welfare Benefits

In this article you have seen how personal injury compensation might affect your benefits entitlement; why you should still claim if you are concerned and how your solicitor can help set up a structure to separate the ownership and benefits of your compensation using a trust fund to protect your benefits entitlement.