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Personal Injury Claims: Will Compensation Affect my Benefits?

Have you been involved in an accident or injury at work, and need to seek personal injury compensation?

Are you unsure of how it will affect any of your benefits?

If someone’s negligence causes you harm, you can seek legal compensation. These claims are intended to provide financial support to help individuals recover and move forward after an injury.

But, receiving compensation may impact your eligibility for state benefits.

Read this article to find out more about how compensation may affect your benefits and how you can protect your entitlement.

Does personal injury compensation affect benefits?

Your personal injury compensation can potentially affect benefits. The impact on benefits depends on the specific type of benefits received and the laws and regulations governing them in a particular jurisdiction.

In some cases, personal injury compensation may be considered as income and could result in a reduction or loss of certain means-tested benefits, such as income-based benefits or certain disability benefits.

However, it is important to consult with a legal professional or relevant government agency to understand the specific rules and regulations applicable to your situation, as they can vary depending on the jurisdiction and individual circumstances.

What benefits can be affected?

Means-tested benefits may be affected by compensation from a personal injury claim. These benefits are often based on income and financial need, so an increase in income from compensation could potentially impact eligibility or benefit amounts. These benefits may include:

  • Universal Credit
  • Housing benefit
  • Income support
  • Council Tax Support
  • Income-based Jobseeker’s Allowance

Personal injury compensation: Is it taxable?

Personal injury compensation is generally not taxable. According to HMRC, compensation received for personal injuries, whether through a settlement or court judgment, is exempt from income tax.

This exemption applies to various types of claims, including those related to accidents, medical negligence, and industrial diseases.

However, it’s important to note that any interest earned on the compensation amount may be subject to tax.

Additionally, if the compensation includes elements such as loss of earnings or damages for non-physical harm, those specific components might be subject to taxation.

Personal Injury Trust

The fear of losing crucial benefits is a major deterrent for those seeking compensation after an accident or injury. The key is establishing a personal injury trust.

This special account acts as a repository for any compensation payouts, shielding that money from being counted against benefits eligibility and allowing the injured to access both sources of support.

The trust protects benefits by segregating awarded funds; officially, on paper, the claimant’s assets remain unchanged. Simultaneously, trustees manage the trust to disburse money directly to the beneficiary or pay for their care, housing, treatment, or other needs.

By understanding options like these trusts, the injured need not forego rightful compensation out of fear.

With the help of a trust, your benefits can be preserved while still receiving fair payment for harm done. You need not sacrifice one for the other when both are essential.

Seeking Legal Guidance

Given the complex interaction between personal injury compensation and benefits, it is advisable for individuals to seek legal guidance to understand the potential implications. A qualified attorney can provide insight into how compensation may impact specific benefits and help individuals navigate the process effectively.

What are the Benefits?

While receiving compensation through a claim can provide much-needed financial support, it is essential to consider the potential impact on existing benefits. By seeking legal advice and understanding the implications, individuals can make informed decisions to balance their compensation and benefits effectively.

If you are in need of a personal injury lawyer in Cambridge or the surrounding area, contact Capital Lawyers today and we will help.