Does Personal Injury/Medical Negligence Compensation affect Benefits?

Posted on: 5 mins read
Last updated:
Kate McCue

Medical Negligence Associate Solicitor

Share Article:

If you successfully pursue a Personal Injury or Medical Negligence claim, you'll receive compensation. A Personal Injury trust provides a secure space for these funds, protected by at least two Trustees, including yourself.

You might be concerned about your benefits being affected by the claim, but safeguards are in place to prevent this. Establishing a Personal Injury Trust, also known as a Compensation Protection Trust, can shield your compensation. Once held in a Personal Injury Trust, it remains exempt from means-tested state benefit assessments, ensuring your income remains unaffected.

As of August 2023, 22.6 million individuals in the United Kingdom were receiving various forms of benefits. This means that there is a high chance that you could be concerned about pursuing a personal injury claims due to the thought of losing your benefits. 

For free legal advice get in touch with our Personal Injury or Medical Negligence Solicitors, where we can deal with your case on a No Win, No Fee basis.

Why do I need a Personal Injury Trust?

A Personal Injury Trust can help protect any current or future means tested benefits after you get a compensation payment because of a Personal Injury or Medical Negligence claim. Some of the means tested benefits include:

  • Income Support
  • Housing benefit
  • Council Tax benefit
  • Working Families Tax Credits
  • Disabled persons Tax Credit
  • Job Seekers Allowance
  • Employment and Support Allowance
  • Pension Credit
  • Child Tax Credit
  • Universal Credit
  • Medical Benefits such as free Prescriptions, eye tests etc.

If your savings exceed £6,000, your benefits may be reduced, and exceeding £16,000 could stop your benefits entirely. Thus, a Personal Injury Trust becomes crucial. Compensation exceeding the £16,000 threshold puts your free medical benefits and other essential aspects of livelihood at risk.

Once the money is in your Trust, it can stay in there until you require it. If you don’t need the money, then it remains in there.  You may want to talk to a Financial Advisor about any investments and how to manage it in the most tax efficient way.

You can spend the money for anything you want as long as the Trustees agree to sign the withdrawal form or the cheque.

You can’t make regular payments to yourself though, as this could be classed as income. Remember, any amount over £6,000 that you have in your personal bank account could affect your benefits.

TrustpilotStarsWe're ratedExcellent

Compensation and State Benefits

Hundreds of thousands of people are injured every year in England and Wales as a result of  personal injury or medical negligence. If this has happened to you, then you could be entitled to compensation.

Many people are often reluctant to make a claim for compensation because they don’t want the compensation to have an impact on their current state benefits.

How to Prevent This

Money received after an injury (for example, compensation, payment from accident insurance) is disregarded for an entitlement assessment for 52 weeks and this includes any interim payments you get.

If you’re currently in the process of applying for the above benefits, then for the first 52 weeks after any personal injury or medical negligence compensation has been paid to you it will be disregarded when assessing your entitlement to benefits.   This could be the first interim payment of compensation so a Personal Injury Trusts should be considered at an early stage.

How to Set Up a Personal Injury Trust

Firstly, you’ll need 2 people who are willing to act as Trustees and who would have control over the compensation. A Personal Injury Trust is similar to any other bank account and your compensation will be transferred into it in the exact same way.

The money in the Personal Injury Trust must come solely from the compensation that you are awarded and no additional funds can be added. You can make small, irregular withdrawals from the Trust to remain eligible for benefits, and you need to ensure that these are below the savings limits – but always remember the £6,000 rule.

The Trustees also have legal duties and must be at least 18 years of age. The Trustees must be individuals who you trust and haven’t had a history of money problems. Since the compensation is not the Trustee’s money, it won’t affect their benefits, tax position or anything income-related.

It can take several months to set up a Personal Injury Trust, so we recommend getting in touch with us before you receive your compensation, so our specialist Court of Protection Solicitors  can guide you through the process.

Our Court of Protection Solicitors will assist the Trustees to set up a separate bank account, in which they can deposit the compensation payout. Once the compensation is in the Trust, it can be accessed with consent of the Trustees.

You must approach with consideration and make sure that any withdrawals made don’t place your household income above the savings threshold, for means tested benefits. The money held in a Personal Injury Trust will usually be taxed in the same way as savings, and the type of Trust you need depends upon your individual circumstances. For more information get in touch with our Court of Protection Solicitors.

Even though your Trustee is appointed to deal with your funds, you can remove Trustees if you don’t think that they are using the money for your benefit or acting in your best interests.

A common disagreement is not being given permission to have money at a certain time, but there may be a good reason for this. It’s always worth talking things through with the Trustees to see if you can resolve the issues rather than removing them – if you have any questions relating to this, then do not hesitate in reaching out to our Court of Protection Solicitors for some tailored advice to your situation. 

How Much Does It Cost to Set up a Personal Injury Trust?

To set up a Personal Injury Trust, it can cost from £900 (VAT Included) depending on how complex the Trust is and whether you need a home visit.

Can a Personal Injury Trust affect Care Fees?

Should you need to move into a care home, a Personal Injury Trust can help safeguard your compensation and ensure you don’t have to use it to fund your long-term care home fees.

Contact Us

We’ve recovered hundreds of millions of pounds in compensation for people who have suffered because of medical negligence. We’ve also helped them access the specialist care, treatment and rehabilitation they need to start to rebuild their lives – and receiving benefits should never deter you from seeking the compensation that you deserve.

Whether you’re at the start of your journey, or nearing the end, we can help you every step of the way – just call us on 0808 239 6043 for a free claims assessment.


Simpson Millar Solicitors. (n.d.). Personal Injury Trusts.

House of Commons Library. (n.d.). How savings can affect benefits.

Health and Safety Executive. (n.d.). Statistics.

Simpson Millar Solicitors. (n.d.). Court of Protection Solicitors.

Kate McCue

Medical Negligence Associate Solicitor

Areas of Expertise:
Medical Negligence

Kate joined the Clinical Negligence department at Simpson Millar in January 2023 after previously working at Chris Kallis Solicitors in Plymouth. Kate qualified as a solicitor in 2004 and has developed extensive experience in both Personal Injury and Medical Negligence.   

Initially Kate started working as a Defendant Solicitor for firms such as Bond Pearce LLP and DAC Beachcroft Claims Ltd. This has allowed Kate to develop a tactical advantage to her cases, using the experience of how a claim is dealt with from a Defendant’s perspective. 

Get in touch, today!

Fill in the form below to get in touch with one of our dedicated team members, or call our team today on: 0808 239 6043

This data will only be used by Simpson Millar in accordance with our Privacy Policy for processing your query and for no other purpose