lump sum compensation and means tested benefits - help please

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I hope somebody on here has some experience of this as nobody seems to be able to give me a straight answer.

In a nut shell -

After a very long drawn out process DH is expecting a sizable lump sum in criminal injuries compensation including an amount for future loss of earnings.

The schedule of loss used to calculate the amount of future loss of earnings includes future means tested benefits as income.

My question is -will the lump sum once recieved be classed as savings/capitol for benefit purposes. And if it does, as this would void future benefits should they be removed as income from the schedule of loss.

Neither the benefit office nor our legal representative seem to be able to answer this question.

After many hours trawling the net I have found a statement (House of Commons Archives)that says it is classed as capital with no intention to change the rules but this is dated 2003 so I dont know if this has changed.

Any help would be appreciated.

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sammyjammy

If he is claiming benefits as a result of the aincident then I believe not only will he be expected to use the money to live off but there may be a situation where the benefits he has received have to be repaid from the lump sum, however I think you need specialist advice, has the settlement been declared to the DWP yet? They will be very unlikely to give you advice until it is offically declared, I would imagine a decision maker will be required to decide on your case on an individual basis.

SuziQ

There have been lots of similar threads to this one of you do a search. I seem to remember that whilst the money given as comp for loss of future earnings is counted,any compensation for injuries etc is not.It always frustrates me that this sort of advice is so hard to get from the government agenies so that you can actually feel informed all along.

SuziQ

Here are 2

http://forums.moneysavingexpert.com/showthread.html?t=1429563&highlight=compensation

http://forums.moneysavingexpert.com/showthread.html?t=1324481&highlight=compensation

NASA_2

The compensation can be disregarded for a period of 52 weeks.

Check out the Decision Makers Guide.

Tibbledom

I agree it is hard to find on-line information about this.

I would suggest you seek advice from your local CAB. They have access to a book called "CPAG welfare benefits" which does have information about treatment of injury and compensation payments for capital and income purposes. There is some scope for putting the money in trust (and as ESA says you get a 12 month disregard to give time to do this) to provide income and capital relating to the injury or illness and which will be ignored for benefits purposes. But you need specific advice.

The trouble with some of the queries on capital for benefit purposes is that the rules are covered in the regulations for each individual benefit and then the interpretation of the regulations is often determined by how the regulations are applied in practice and cases taken to appeal. That said the rules for some of the main means tested benefits such as Housing Benefit, Council Tax Benefit, Income support are very similar.

As for on-line information from an HB/CTB perspective there is information which I quote below at the DWP advisers section at

http://www.dwp.gov.uk/advisers/rr2/working/06.asp

“Compensation payments [HB Sch 6.14, 45 & 46, HB(SPC) Sch 6.17; CTB Sch 5. 14, 46 & 47, CTB(SPC) Sch 4.17]

For HB/CTB purposes, compensation payments will normally be counted in full as capital. Capital will not be counted if it is held in trust or by the ‘Court of Protection’ as a result of a personal injury payment – for example, a criminal injury payment or a vaccine damage payment”

But as I say best to get advice.

NASA_2

I dunno whether this compensation is the same as a Personal Injury Claim but here is what it says for the latter:

Payment for personal injury

29508 Any lump sum payment made because of a personal injury to the claimant or
partner and not placed in trust is disregarded for a period

1. beginning with the first date of receipt by the claimant or partner of such a
payment and
2. ending when

2.1 the claimant or partner no longer has any part of the payment
remaining (including where the claimant or partner has used any part of
the payment to buy an asset) or
2.2 52 weeks have elapsed
whichever is the sooner1.

1 JSA Regs, Sch 8, para 17A; IS (Gen) Regs, Sch 10, para 12A

paper_clip

Thanks every body for your help so far, it hasnt been declared to the DWP yet as the final settlement has not yet been agreed (only been waiting 3 years its a miracle we still have a roof over our heads) but we are due to be paid a decent interim in the next few weeks, I was just worried that they would stop all out tax credits when we get that payment through, the interim has been granted so that my hubby can start uni but if the benfits get cut before the full award then the interim is useless. If the 12 month rule is correct then we should be okay, still waiting for our legal team to come back with some solid info for us but it looks like some sort of trust fund will be needed when we get the full award.

Cheers guys

CoolChair

Tax credits are means tested on income not capital so the award of damages would be disregarded for that anyway providing you dont create a massive income from it. It is only benefits that are means tested on capital in which case put it in a personal injury trust and it will be disregarded for capital means testing, the benefits you keep will pay for the costs of setting up the trust. Dont get conned into letting the solicitor or advisor who sets it up act as your trustee though, you can do that yourself with a family member or other close personal friend, professionals charge an annual fee effectively for doing nothing