Are you seeking compensation for a personal injury that wasn't your fault? Are you concerned that it will affect the benefits you receive?

It's an entirely natural thing to be concerned about – especially if your accident meant you lost your job or have been unable to work.

It's rarely a question of "benefits or compensation". However, the more compensation you receive, the more likely it is to affect your benefit payouts.

The root of the matter is the amount of compensation – and that is calculated on a case-by-case basis. It will depend on how severe the injury was, how it's affected your life and what the compensation covers.

One way to resolve the issue is by setting up a personal injury trust. This separates your compensation payments from your personal finances and ring-fences them.

If you do decide to go down this route, it can be wise to consider getting help from an experienced personal injury lawyer. They can furnish you with the facts you need to ensure you're getting both the compensation and the benefits you're entitled to.

Means-tested benefits

Some benefits are means-tested. This means they're calculated according to your income and capital. The more you have, the fewer benefits you receive – and vice versa.

Means-tested benefits include Universal Credit, Income Support, Jobseeker's Allowance, Employment and Support Allowance, Council Tax Reduction and Housing Benefit. They also cover free prescriptions, dental charges and eyesight tests.

These types of benefits also determine the amount that you're expected to contribute to care home or nursing costs.

Means-tested benefits apply to people who have less than £16,000 in savings. But anyone with £6,000 or more in savings can have their benefits affected.

If the compensation payment takes you over £6,000, your benefit calculations will change. If the combination of your savings and compensation falls below this amount, there won't be any change.

Personal injury compensation is calculated on a case-by-case basis, so it's difficult to offer concrete examples. However, a minor whiplash claim where you were back to work after a couple of months would be unlikely to push you over the savings threshold.

But if you suffered a severe injury that put you out of work in the long term and necessitated care costs, you might win an amount that takes you over the line. If this happens, you could see a loss of or reduction in your benefits.

What is the 52-week rule?

When you receive a compensation payment, it doesn't count towards your savings threshold for the first 52 weeks.

If you're tempted to give it away so that you can keep your benefits, you may be caught out by the DWP which examines the "reasonableness" of your spending.

Benefits that aren't means-tested

Some benefits are lump sums given irrespective of your savings – for instance, the Personal Independence Payment (PIP).

A compensation payment won't affect these kinds of benefits.

Should you claim compensation if your benefits will be affected?

If you or your solicitor calculate that your expected settlement could affect your benefits, you might wonder whether it's worth it.

This seems counterintuitive – after all, you're legally entitled to both. It all hinges on the amount of the settlement you're pursuing.

Let's put it this way: if you're pursuing a settlement in the hundreds of thousands, you won't miss your loss of benefits.

It's more of an issue when people seek smaller settlements – ten or 20 grand, let's say.

This is a lot of money, but it's unlikely to last forever. In this situation, losing some or all of your benefits can be a blow.

How can you protect your compensation?

One way around this issue is to set up a personal injury trust. This is when you ring-fence your personal injury compensation in an account that's separate from your personal finances.

This allows you to keep both your benefits and your compensation – and means that any money you're putting aside for future care fees is protected.

There are four requirements for a personal injury trust.

1. You need to have at least two trustees (excluding yourself).
2. You have to be the beneficiary of the trust.
3. The trust fund has to be kept separately from your income.
4. The personal injury trust can include only your personal injury compensation money and nothing else.

With a personal injury trust, you can access your compensation money and your state benefits will be protected.

It's possible to set up a trust on your own, but it can be advisable to seek legal guidance. An experienced personal injury lawyer will help to ensure that everything is above board – and that the trust is working in your best interests.

Why hire a personal injury solicitor?

Personal injury law is a complicated area. You want the compensation you deserve, but finding out the right amount to pursue isn't exactly intuitive.

Once you've decided to pursue compensation, you might be put off by the prospect of your benefits being cut or axed altogether.

An experienced, knowledgeable personal injury lawyer can help you to set up a personal injury trust, ensuring you get full whack without jeopardising your means-tested benefits.

A solicitor can help you navigate this tricky area of the law, helping you to appoint trustees and giving you the advice and support you need to reach a positive outcome.

As a rule of thumb, you should consider a personal injury trust if you receive means-tested benefits and either already have over £6,000 in savings or are expecting to receive over £6,000 in compensation.

If that sounds like you, don't hesitate to get in touch for a free, no-obligation chat. We'd love to help you get the compensation and benefits you deserve.