Making a dental negligence claim if you’re on benefits: What you need to know
If you’re in receipt of some means tested state benefits, receiving a lump sum of compensation for a successful dental negligence claim could potentially affect the benefits that you receive. However, this is not the case for all types of government benefit and there are also steps you can take to protect your entitlement to them. This guide provides information on which benefits may be affected, why and how, and outlines how you can take action to help protect your benefits.
Why and how does a dental claim impact my benefits?
Under current UK legislation, your entitlement to receive certain benefits is affected if you have ownership of savings or receive lump sums (such as compensation for a dental claim) that total over £6,000 per family unit (or £10,000 if you are over the state pension age). If you have £16,000 or more in savings, or receive a lump sum that takes you over that amount, you will lose your entitlement to any of the means tested benefits below, until your capital falls below the threshold again. If you have somewhere between £6,000 and £16,000, the amount over the £6,000 threshold is taken into account and considered as contributing to your monthly income.
The way this works for working age people is that for each £250 (or part of) that you have over the £6,000 threshold, it’s considered that this gives you a monthly income of £4.35 (£1 a week) and this is deducted from any benefits you receive.
As an example, if you have no other savings and receive a dental negligence compensation payment of £10,000, the first £6,000 of this is ignored. The remaining £4,000 is considered as paying you a monthly income of £69.60 (£4,000 ÷ £250 = 16, 16 x £4.35 = £69.60), so you would receive your usual month’s benefits with this amount subtracted. As the amount of savings or your lump sum reduces, so does the amount subtracted from your benefits, until you fall below the £6,000 threshold again and are entitled to claim the full benefit amount again.
What counts as savings when it comes to state benefits?
Savings, in relation to means tested benefit claims, are generally considered as any money you have in bank or savings accounts (whether these accounts pay interest or not), any cash you have, any investment accounts or stocks and shares, plus the value of any properties you own that are not your main residence (see below for some exclusions). Savings also include any money held in a tax-free childcare account, any income bonds or premium bonds.
It should be noted that depriving yourself of savings in a deliberate attempt to increase the amount of benefit you are eligible to receive, by giving the money to family members or buying expensive items, can be treated as ‘notional capital’, which essentially means that in the eyes of the government, you still have the money. However, using savings to pay off debts, or spending on ‘reasonable’ goods and services is allowed.
If you are refused benefits due to notional capital, it may be possible to appeal the decision.
What DOESN’T count as savings in relation to benefits claims?
The value of properties that you own and don’t live in might NOT be counted as savings if you are:
- trying to sell the property (a period of up to 26 weeks is allowed for this before it starts counting as savings)
- going to move into the property but are carrying out essential works or alterations first (a period of up to 26 weeks is allowed for this before it starts counting as savings)
- taking legal advice over a property with the view to moving into it (a period of up to 26 weeks is allowed for this before it starts counting as savings)
- not living in the property due to a relationship breakdown (a period of up to 26 weeks is allowed for this before it starts counting as savings, but if the former partner is now a lone parent and continues to live there, this does not count as savings indefinitely)
Other things that do not count as savings, in relation to means tested benefit claims, include:
- personal possessions, such as a car, furniture or jewellery
- arrears of some state benefits (e.g. if you have been underpaid and receive a lump sum in back-payments)
- any life insurance policy that has not be cashed in
- your business assets
- the value of a pre-paid funeral plan
- any Social Fund grant payments
Which benefits could be affected by dental claim compensation?
The means-tested benefits that can be affected by savings or a lump sum, such as compensation, include:
- Employment and Support Allowance
- Housing Benefit
- Income Support
- Jobseeker’s Allowance
- Pension Credit
- Universal Credit
- Working Tax Credit
If you also receive any council tax support (CTS) from your local council, this may also be affected, although this does vary by scheme and area.
Could receiving dental negligence compensation affect Personal Independence Payments (PIP)?
Personal Independence Payments are not related to income or savings, so claims for PIP should not be affected by any dental negligence compensation you receive. If you’re still claiming Disability Living Allowance (DLA) then the same applies.
How to protect your eligibility to benefits if you receive dental negligence compensation
Compensation that is awarded for a dental negligence claim can be protected by setting up a Personal Injury Trust to hold and manage the funds. Trusts are managed by Trustees, of which the claimant can be one. Having a Personal Injury Trust means that you can still access the money from your compensation award, but any entitlements to receive state benefits can be protected.
If you are considering starting a claim for dental negligence compensation, contact the Dental Law Partnership for expert advice and to discuss your options, on 0808 231 3647.