The Impact State Benefits Have Compensation
State benefits can have an impact on compensation, particularly in relation to certain types of compensation, such as personal injury or employment-related compensation. The effect varies depending on the specific circumstances and the type of benefit received. Here are some key points to consider:
1. Means-Tested Benefits: Means-tested benefits, such as income-related benefits, are typically assessed based on an individual’s income and assets. Compensation received may be considered as income and can affect eligibility. If the compensation increases your income or exceeds the threshold set by the benefit scheme, it could potentially reduce or extinguish your entitlement to certain benefits such as Universal Credit, ESA, Housing Benefit and Council Tax Benefit.
2. Non-Means-Tested Benefits: Non-means-tested benefits, such as PIP and other disability benefits or non-contributory benefits, are generally not affected by compensation. These benefits are not means-tested, and their eligibility and amount are based on specific criteria, such as the individual’s disability or health condition.
3. Compensation Protection: In some cases, compensation awards may be structured or protected to the impact on means-tested benefits. For instance, Personal Injury Trusts (PITs) can be set up to hold compensation funds separately from personal assets, which may help safeguard means-tested benefits eligibility. The personal injury team at Tollers can provide guidance on protecting your compensation while retaining benefits entitlement.
4. Compensation Recovery: In certain situations, the government or relevant agencies may seek to recover some state benefits paid out from compensation awards. For example, if you receive compensation for an injury caused by a third party, the government may have a right to recover certain benefits paid out as a result of that injury. This is known as the Compensation Recovery Scheme. However, there are limits to what can be recovered, and specific rules and procedures apply. If loss of earnings is recovered, to avoid double recovery, credit must be given for any benefits replacing that income, such as Universal Credit, ESA and even Industrial Injury Disablement Benefit (IIDB).
The deductible amount from compensation will not exceed the amount claimed for lost income.
Similarly, disability related benefits, such as PIP, can only be deducted from claims for care, assistance and, in some cases, travel expenses.
Talk To Tollers
Given the complexity of the interaction between state benefits and compensation, it is strongly recommended to seek advice from the team at Tollers, who specialise in this area. They can provide personalised guidance based on your circumstances, ensuring you understand the potential impact of state benefits on your compensation and help you navigate any necessary steps to protect your entitlements.