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Personal Injury Claims & Benefits

signatureDear Brian

I receive State Benefits, but I am now about to receive a substantial amount of money in compensation for my personal injury claim.  I suppose my benefits have to end.  Is that correct?



Dear Andy

Firstly, there are some benefits that you are entitled to receive however much money you have.  These include Disability Living Allowance, Personal Independence Payments, Severe Disablement Allowance, Attendance Allowance, Child Benefit and Carer’s Allowance.

There are other benefits which are means-tested.  These will have to stop if you receive a large sum of money unless you enter into a Trust.  Means-tested benefits include Income related Employment and Support Allowance, Income Support, Working and Child Tax Credits and Housing and Council Tax Benefit.

Normally, means-tested benefits are lost if you have capital of more than £16,000.  To protect means-tested benefits, you can put in place a Personal Injury Trust.  It costs to set one up and there are usually annual costs as well, but those costs are far less than the value of your benefits which you would be able to keep if you had a Trust.  The reason you can keep them is that the benefits are regarded as a supplement to your income, whereas the money in the Trust is treated entirely as being capital.  So if the money is in capital form and is not used to supplement income, it is legitimate for you to receive benefits as well as to have the benefit of that capital in the Trust.

Thus, if you want to buy a car, a house or something similar, you would just withdraw the money from the Trust and carry on claiming your means-tested benefits.  As I mentioned already, non-means-tested benefits are not touched anyway.

I hope that this helps you.


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