Spring 2016

Personal Injury Update

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Personal Injury Trust Case Study

Jenny was injured in 2010. When her claim was settled in 2015 for £30,000 by way of compromise, Jenny had no savings and was receiving £100 per week Income Support, £50 per week housing benefit, and £15 per week council tax benefit. Her damages would fall to be assessed as capital 52 weeks after first receipt of the award.

The concernsApart from a holiday, Jenny did not have any significant spending plans for her compensation. If she kept the money in her account, Jenny would lose around £165 per week in benefits, following the 52 week grace period. To replace that lost income, she would have to spend her compensation. As a result, most of her award would have been spent within three years. Once her award monies were down to £16,000 or under, Jenny would be able to re-apply for means-tested benefit, however she could only expect full-benefit entitlement to be restored when her balance was less than £6,000.

Jenny was reluctant to set up a Personal Injury Trust as she believed it would be too complex, and that she

wouldn’t be able to get her money as and when she wanted. To retain her benefits, she had considered allowing her son to hold the award on her behalf.

How Nestor HelpedWe met with Jenny and discussed her situation. First we pointed out that if she gave her money to her son, ‘capital deprivation’ rules would apply and she would still lose her benefits.

Nestor’s Independent Financial Adviser explained that if she set up a Personal Injury Trust, she would continue to receive £165 per week in benefits. The trust would cost £500 plus VAT to set up, which could be paid from her award – this is a Nestor one-off fee.

We explained that if she put the remaining £29,400 in the trust and spent none of the money for 3 years, during that period, she would receive all of her benefits totaling £25,740.

Jenny’s trustees are two family members who live locally. She knows that if her circumstances change, she can easily change her trustees or stop the trust. She does not need to keep formal trust accounts or submit a trust tax return, and finds her Personal Injury Trust simple to manage and financially effective.

In this issue...PAGE

01 Personal Injury Trust Case Study

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02 Welfare benefit changes

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03 Let’s talk about...fixed fees

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Welfare benefit changesBy Phil Runciman, Welfare Benefits Advisor, Nestor

philipr@nestor.co.uk

As the government’s welfare reforms gather pace, a host of changes are due to be introduced during 2016. The government aims to save £12 billion on welfare bills by 2019-2020 and although they have met with some resistance, most notably the recent defeat in the House of Lords over the proposed changes to tax credits, the vast majority of changes are being introduced.

April 2016 will see the introduction of the Single Tier Pension, which will replace the basic State Pension and State Second Pension for all women born on or after 6 April 1953 and all men born on or after 6 April 1951. Although this will increase the amount of basic state pension most people are expected to receive, there will be losers as the government changes its policy on entitlement.

As the rollout of Universal Credit gathers momentum, Work Allowances, the amount one can earn without your benefit being affected, is being reduced alongside an increase in help with childcare. This will affect non-disabled, childless claimants the most as they will lose all work allowances although all claimants may lose out to some degree.

Working age benefits and tax credits will be frozen for 4 years. Pensioner benefits are excluded from the benefit freeze. Disability benefits including Personal Independence Payment, Attendance Allowance, Disability Living Allowance and Employment and Support Allowance (Support Group), along with the disability-related elements of tax credits and statutory payments will be uprated in line with the Consumer Prices Index (CPI).

As the CPI fell in the year to September 2015, these benefits will not be increased in April 2016. 

The family premium element within Housing Benefit will be withdrawn for new claims/births after 1st May 2016 and backdating is being reduced to 4 weeks for new claims from working age claimants.

The Tax Credit income disregard will be reduced from £5000 to £2500.

Autumn 2016 will also see the benefit cap reduced to £23,000 for London claimants and £20,000 for the rest of the UK. Claimants are exempt from the cap if they or anyone in their household (a partner or dependent child) is getting disability benefits including DLA, PIP, Attendance Allowance or are allocated to the support group of ESA or are entitled to Working Tax Credit. Claimants are also exempt if anyone in their household is entitled to Carer’s Allowance, the Carer’s Element of Universal Credit or Guardians Allowance.

Finally, 2017 will see some the of the biggest and most controversial changes, inclusive of the following;

• new ESA claimants in the Work-Related Activity Group will not receive the additional component;

• there is increased conditionality for Universal Credit claimants aged 18 to 21 and lone parents with a youngest child aged 3 or over;

• anyone starting a family will no longer be eligible for the Family Element in Tax Credits nor the first child premium in Universal Credit;

• there will also be changes to Personal Independence Payment that will see a reduction in the points awarded for use of van aid within 2 descriptors.

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Let’s talk about...fixed feesBy Juliet Young, Medical Collation and Chronology Ltd

juliet@collationandchronology.com

There has been a lot of social media speculation about the impact of fixed fees within the clinical negligence arena.

Views are polarised. Some are very much opposed to

the introduction of such a regime, others have taken a more sanguine approach and hope that any changes will be positive.

Out of all the speculation, the key concern in both camps is that the claimant will receive their deserved justice.

Clinical negligence claims are, by their nature, complex and time consuming. By enforcing the fixed fee regime will this suffocate the claimant’s lawyers with red tape?

We have spoken to our clients about how we as a service provider for the collation of medical records, can assist them to be more cost effective in the run up to these proposed changes. Whilst currently disbursements are ring fenced, we here at MCC Ltd take a proactive approach to costs and everything else we do.

We offer a service that reduces the time lawyers have to spend dealing with voluminous and complicated medical

records, thereby freeing them to concentrate on complex issues of liability and causation; and leaving them time to talk to their clients, who are often dealing with sensitive and upsetting issues.

We recently dealt with a case involving 20 lever arch files of medical records. This took two members of staff two full days to collate. The claimant had lost her eyesight through the alleged hospital negligence. Our client took advantage of our fixed fee scheme and was able to assess our costs without the need for an estimate. Our turnaround is a guarantee, so they were able to instruct us having transparency in all factors negating any delay in the progress of the case. The time we spent on those files, on the lawyer’s behalf, made the medical records more accessible, easier to navigate and ensured that our client could focus on the issues to resolve the matter for the claimant seeking justice.

If/when fixed fees are introduced the hours solicitors can spend on a given case will be reduced if they are to maintain profit costs. Our service ensures that their valuable time will not be spent on the collation/analysis of medical records.

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The information contained in this newsletter is for illustrative purposes only and should not be relied upon. The figures quoted will vary according to each individual case. Specific figures and costs are discussed at the outset of each instruction that is dealt with by Nestor. This newsletter is for general guidance only and represents our understanding of law and HMRC practice as at May 2016. Tax and benefit legislation/regulation is liable to change.

Nestor is a trading style of Nestor Financial Group Limited which is Authorised and Regulated by the Financial Conduct Authority. FCA Reg No. 592783 and registered in England & Wales No.08201442. Vat Registration 855355994.

We take great care to ensure that Nestor complies fully with the guidelines set by the regulatory bodies within the Financial Services industry. No information contained on this publication should be construed as an offer or invitation to invest. The Financial Conduct Authority do not regulate deposit accounts, Personal Injury Trusts, Periodical Payment advice, Taxation and Trust advice