If you’ve suffered unnecessary harm because of clinical negligence, you may be entitled to claim compensation, but does medical negligence compensation affect benefits? Many people hesitate to pursue a medical negligence claim because they fear losing benefits. With millions in the UK receiving means-tested benefits such as Universal Credit, Housing Benefit, or Personal Independence Payment, this concern is understandable.
This guide will help you understand the relationship between medical negligence compensation and your state benefits. We’ll explain whether receiving a compensation payout could affect your benefits entitlement, and how you can protect both your compensation and benefits by setting up a Personal Injury Trust (PIT). Our guide will also cover what a PIT is, how to create one, what it costs, and the legal duties of trustees. Then, we clarify your reporting responsibilities and explore how a Personal Injury Trust can safeguard your compensation against care fees.
Throughout, we’ll provide expert insight and practical steps, so you can confidently claim the medical negligence compensation you deserve without jeopardising your future financial stability.
Contact Us
To discuss your circumstances and get tailored advice, contact our team at Medical Negligence Solicitors UK Co today. Get in touch today to learn more by:
- Calling us on 03301230546
- Using the live chat feature
- Starting your claim online
Frequently Asked Questions
- Does Medical Negligence Compensation Affect Benefits?
- How Can I Prevent A Medical Negligence Payout From Impacting My Benefits?
- What Is A Personal Injury Trust?
- How Do I Set A Personal Injury Trust Up?
- Will A Personal Injury Trust Protect My Compensation From Being Used On Care Fees?
- Do I Have A Legal Obligation To Report My Compensation?
- Get Advice From Medical Negligence Solicitors UK Co
- More Information
Does Medical Negligence Compensation Affect Benefits?
Yes, medical negligence compensation can affect your state benefits if you do not take steps to protect them. Most means-tested benefits have savings thresholds. If your compensation award pushes your savings above these thresholds, your entitlement to certain benefits could be reduced or stopped altogether.
The main thresholds are:
- If your savings exceed £6,000, your means-tested benefits may be reduced.
- If your savings exceed £16,000, you could lose entitlement to those benefits altogether.
This could impact benefits such as:
- Universal Credit
- Housing Benefit
- Pension Credit
- Income Support
- Employment and Support Allowance
- Council Tax Support
- Child Tax Credit
Any lump sum or interim payment you receive as a result of your medical negligence compensation could count towards these thresholds if held in your personal bank account.
To avoid losing benefits, you should consider setting up a Personal Injury Trust. We’ll talk more about trusts in the next section.
For personalised guidance on the question “Does medical negligence compensation affect benefits?”, contact our expert advisors at Medical Negligence Solicitors UK Co today.
Why Do I Need A Personal Injury Trust?
A Personal Injury Trust (PIT) allows you to protect your compensation payment so it does not count towards the savings thresholds used to assess eligibility for means-tested benefits.
Key benefits of a Personal Injury Trust include:
- The compensation is held separately from your personal finances.
- You can be a trustee of your own trust, along with other nominated trustees.
- How the money is spent is controlled by trustees.
- The funds in the trust do not count towards the saving thresholds for benefits.
The money in your PIT must only come from your compensation settlement. You cannot top it up from other sources. With the right legal arrangement, your trust fund becomes the most tax-efficient way to safeguard your payout.
For more information on setting up a trust, speak to our expert legal team now.
What Is A Personal Injury Trust?
A Personal Injury Trust is a legal arrangement that holds your injury compensation separately from your personal assets. It must be set up with at least two trustees, one of whom can be you. The trust is held in a separate bank account and can only be used with the consent of the trustees.
The trust protects your compensation payout from being considered when your eligibility for means-tested or support allowance benefits is assessed. This includes both initial lump sum awards and any interim payments.
Your trustees manage the fund in your best interests and approve withdrawals, ensuring that your benefits are not affected by routine income-like payments.
Need help understanding if a trust is right for you? Call our advisors today for a free consultation.
How Do I Set A Personal Injury Trust Up?
To set up a Personal Injury Trust, you will need:
- A minimum of two trustees, one of whom can be yourself
- Trustees who are over 18, financially responsible, and ideally not receiving means-tested benefits
- A separate bank account was opened in the name of the trust
- A legal document, called a Trust Deed, which outlines how the trust will be managed
It’s essential to set up the trust within 52 weeks of receiving your first compensation payment. During this period, the Compensation Recovery Unit (CRU) allows a grace period in which the payment is not assessed against your state benefits.
Don’t delay – speak to our legal experts today and we’ll help you set up your trust efficiently and securely.
What Legal Responsibilities Will My Trustees Have?
Your trustees are legally responsible for managing the funds in line with the terms of the trust and your best interests. They must:
- Approve and document all withdrawals
- Keep accurate records of payments
- Ensure the trust is not misused, e.g. by adding non-compensation money
- Avoid regular payments to you that could be considered income
They do not gain ownership of the compensation received, nor does the trust fund affect their own benefits or taxes. If problems arise, you can remove a trustee and appoint someone new.
For expert advice on choosing the right trustees, speak with our specialist team today.
How Much Will I Have To Pay For A Personal Injury Trust?
The cost of setting up a Personal Injury Trust can vary depending on the complexity of your case, and can depend on the kind of trust you’re looking to set up.
It might seem like a significant expense, but it can be a worthwhile investment in protecting your benefits entitlement, your future needs, and the full value of your clinical negligence compensation.
Contact our team of advisors today to learn more about how our solicitors could help you set up a PIT.
Will A Personal Injury Trust Protect My Compensation From Being Used On Care Fees?
Yes. A properly drafted Personal Injury Trust can protect your compensation from being assessed as capital for the purpose of long-term care fees.
Without a trust, your compensation award could be counted when your local authority performs a financial assessment for care home placement. This could result in having to use your payout to pay for care, rather than saving it for future needs.
With a trust in place, your lump sum stays protected, ensuring that you keep access to the care you need without funding it from your injury damages paid.
If you’re concerned about future care costs, contact us today to safeguard your award.
Do I Have A Legal Obligation To Report My Compensation?
Yes. If you receive means-tested benefits, you must inform the DWP or your local authority of any compensation received, even if you intend to set up a trust.
There is a 52-week disregard period, but this doesn’t remove your reporting duty. Failing to disclose could result in:
- Overpayments
- Benefit suspensions
- Repayment demands or fraud investigations
Setting up a Personal Injury Trust and declaring it appropriately will keep you compliant.
Contact us today to learn more about how to manage your compensation, or keep reading to find out how we can help.
Get Advice From Medical Negligence Solicitors UK Co
When you’ve been harmed due to substandard care, you deserve the opportunity to recover and rebuild your life. At Medical Negligence Solicitors UK Co, we help people across the country take legal action for the harm they’ve suffered—and we help them make sure that claiming compensation doesn’t jeopardise their benefits.
We handle cases involving:
- Surgical mistakes
- Misdiagnosis or delayed diagnosis
- Incorrect prescriptions or medication errors
- Birth injuries
- Hospital-acquired infections and sepsis
- Failure to refer for specialist care
Our solicitors will help you gather strong evidence, value your compensation entitlement, and manage every aspect of the legal process.
Our solicitors work on a No Win No Fee basis, using something called a Conditional Fee Agreement (CFA). When you use this kind of agreement, you don’t need to:
- Pay for their services upfront
- Pay for their ongoing services
- Pay for their completed work if the claim fails.
However, should the claim succeed, you will pay a success fee to your solicitor. This will be taken as a legally limited percentage of your compensation.
We also assist with setting up Personal Injury Trusts, handling CRU communications, and ensuring your benefits entitlement is preserved.
You focus on your recovery. We’ll focus on the rest. Speak to our expert team today for free, no-obligation legal advice.
Contact Our Solicitors
Our advisors are here to help. To learn more about protecting your compensation and your benefits, or to find out if you could be eligible to make a medical negligence claim, contact our team today by:
- Calling us on 03301230546
- Using the live chat feature
- Starting your claim online
More Information
To learn more about making a medical negligence claim:
- Learn about the medical negligence claims time limit
- Find out how to make a claim for gallbladder surgery negligence
- Get help making a spinal surgery negligence claim
Or, for further resources:
- Learn about getting benefits and financial support while you’re on low income from GOV.UK
- Get information on HMRC
- Find advice for claimants from NHS Resolution
Thank you for reading our guide. We hope we’ve answered the question, “Does medical negligence compensation affect benefits?”