Advice on Personal Injury Lump Sum Payments
Anybody making a personal injury claim needs to understand how a compensation payment from a personal injury claim affects their tax status and benefits. Ensuring that the money is disbursed and managed in the correct way ensures that it does not replace other funds to which you are entitled.
JMW Solicitors can advise you on the best way to manage your compensation payment in order to ensure that you have the money available for medical care, rehabilitation and other issues caused by your accident or injury. Contact us on 0345 872 6666 or fill in our contact form and we will get back to you.
Are Personal Injury Claims Taxable?
In most cases, personal injury lump sum payments are tax-free as they are not the same as earnings. However, if the payment is delayed and it accrues interest, then you will owe tax on the interest.
Additionally, if you invest your payment and it earns interest, then you would also owe tax on the interest as that would be considered earnings.
How Does a Personal Injury Claim Affect Your Benefits?
Your compensation payment could affect payments for any means-tested benefits including:
- Universal Credit
- Income Support
- Income-related Employment and Support Allowance (ESA)
- Income-based JobSeeker’s Allowance
- Pension Credit
- Reduced Earnings Allowance
- Council Tax Support
- Housing Benefit
Although Working Tax and Child Tax Credit are means-tested benefits, these should not be impacted by compensation payments placed in your savings account.
Can I Protect My Benefits From Being Affected?
The best way to ensure that you do not have to use your compensation to replace any lost benefits is to set up a Personal Injury Trust.
JMW has solicitors with years of experience in setting up personal injury trusts who can help you ensure that your compensation is available when you need it in order to maintain your quality of life.
If you would like to discuss setting up a personal injury trust with our experienced team of solicitors, get in touch today. Simply call us on 0345 872 6666 or fill in our online enquiry form to request a callback.