Compensation - does it affect Incapacity benefit??

MrsB2004

Hi,
I am hoping someone can help as I am not sure of the impact of PPI compensation is on benefits. I have been helping my cousin with her PPI complaint and she has been successful with her PPI complaint and will be receiving circa £7k in compensation! However, she is receiving incapacity benefit and wants to know if the compensation will affect her benefit? She is not trying to get out of paying anything, but is just wondering what happens. She is trying not to get her hopes up about the £7k in case she needs to pay it all to the government!

Has anyone had experience of this? I am unsure as I have not had any dealings with the benefit office.

Any help will be greatly appreciated!

Morlock

For any savings over £6000, £1 of benefit is deducted for every £250, or part thereof, up to £16000 at which point all benefits will stop.

If she has savings of £7000, her benefits will be reduced by £4 per week.

seven-day-weekend

Usually, Incapacity Benefit is not affected by savings.

Oldernotwiser

IB isn't a means tested benefit; does she claim anything else as well?

rogerblack

She will shortly be converted over to ESA.
This is means-tested, and 7K will start to affect the amount paid.
Does she have any other savings?

If not, then as long as she doesn't spend the whole 7K on a nice holiday, but buys at least 1K or so of essentials, and needed replacements, rather than shiny stuff - her benefit will not be affected.

Cpt.Scarlet

rogerblack wrote: »

She will shortly be converted over to ESA.
This is means-tested, and 7K will start to affect the amount paid.
Does she have any other savings?

If not, then as long as she doesn't spend the whole 7K on a nice holiday, but buys at least 1K or so of essentials, and needed replacements, rather than shiny stuff - her benefit will not be affected.

If the person in question is on IB then they will be converted to Contribution Based ESA. If they are placed in the WRAG then this will be limited to one year, after which they will be eligible for Income Related ESA subject to the means test, at which point their savings will be of interest.

MrsB2004

Hi,

Thank you all for your help. She receives housing and council tax benefit, nothing else. Will it affect those? She doesn't have any other savings, and she is wanting to use the £7k to buy her parents a new car as they need a new one. So once she receives the compensation, a chunk of it will go out again so there won't be £7k left.

I really appreciate your quick answers!

Oldernotwiser

MrsB2004 wrote: »

Hi,

Thank you all for your help. She receives housing and council tax benefit, nothing else. Will it affect those? She doesn't have any other savings, and she is wanting to use the £7k to buy her parents a new car as they need a new one. So once she receives the compensation, a chunk of it will go out again so there won't be £7k left.

I really appreciate your quick answers!

Yes, it will affect both of these, if only in a small way.

Buying her parents a new car will be seen as deprivation of capital and she will be assessed as if she still had the money. Although undoubtedly a generous gesture, spending money like this in her situation seems to me to be absolute madness!