The deduction of benefit allowance from compensation in personal injury claims is complex and occurs when an injured client needs to claim state benefits because of their injuries.
When a claim is successful, some state benefits may be repayable to the Department for Work and Pensions (‘DWP’). The DWP manages this through the Compensation Recovery Unit (‘CRU’). The CRU recovers those benefits from the compensator on behalf of the person or organisation at fault for the accident, which is usually an insurer.
The reason for this is to prevent an injured person being compensated twice, something known as ‘double recovery’. As a result benefits can be offset against those parts of a compensation award which represent loss of earnings, the cost of care and transport costs.
A worked Example
Let’s say, for example, that a person is badly injured in a road traffic accident and cannot work for six months. Many people would need to claim Employment and Support Allowance (‘ESA’) in order to support themselves while they were not earning. It’s normal that, as part of their personal injury claim, the injured person would claim for the loss of earnings they have incurred. In this situation, the ESA received would be deducted from the loss of earnings owing, and paid back to the CRU. For example if the net loss of earnings was 10k and benefits were 4k, then the insurer would pay the DWP 4k by way of refund of benefits. The injured person would keep the 6k balance from the insurer, which, together with the 4k of benefits they have received, would equate to the earnings loss of 10k.
ESA is not the only benefit that is potentially deductible from a loss of earnings claim. Others include, Incapacity Benefit, Income Support and Job Seekers’ Allowance.
Gratuitous Care
Another commonly claimed loss is for gratuitous care. This is often claimed when people need someone to fetch and carry for them because they are incapacitated due to their injuries. Examples might be doing the food shopping, taking over the household chores, or driving the injured person to and from medical appointments. This care can be claimed at an hourly rate, usually (if the person providing the care is not a professional carer) £6.50 per hour.
Attendance Allowance, the care component of Disability Living Allowance and the living component of Personal Independence Payments will be offset against claims for gratuitous care.
Although less commonly claimed, an injured person’s claim for transport cost such as mileage, taxi fares, tram fares and bus fares will trigger deductions in respect of mobility allowance, and the mobility components of Disability Living Allowance and Personal Independence Payments.
Offsetting has to be done on a like-for-like basis so it is not possible for a benefit linked to loss of earnings to be deducted from a part of a claim relating to care or mobility.
Compensation can affect a person’s benefit entitlements, as it may take an injured person over the threshold at which they are able to claim means-tested benefits meaning their benefits could be reduced or stopped altogether. This may be prevented by setting up a Personal Injury Trust for the client which is something we are able to advise on.
John Green
Benefits are never offset against the part of an award that represents compensation for the injury alone, known to lawyers as the award for “Pain, Suffering and Loss of Amenity”.
For further information please call a member of our team on 0114 218 4000, email info@tayloremmet.co.uk or enquire here.
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