Compensation awarded following a personal injury or medical negligence claim can be substantial, particularly if it is compensating for huge losses for the rest of your life such as care, lost earnings or similar. It is natural to have concerns about how that money may affect your wider financial situation.
A common question is whether receiving compensation will affect entitlement to means-tested benefits or any such financial support such as care funding when you are older.
A recent High Court decision, CGT v West Sussex County Council [2026] EWHC 293 (Admin), has provided helpful clarification on this issue. The case reinforces an important principle: personal injury compensation is intended to support the injured person’s needs and should not be treated as ordinary savings.
The purpose of personal injury compensation
Personal injury damages are not intended to be a reward or a windfall.
The purpose of compensation is to place the injured person, so far as money can, in the position they would have been in had the injury not occurred. In practice, this means compensation is intended to cover matters such as:
- pain and suffering and the impact of the injury on daily life
- loss of earnings or reduced ability to work
- ongoing care and support needs
- medical treatment and rehabilitation
- specialist equipment or adaptations to a home
For serious or catastrophic injury cases, the compensation must often support an individual for many years, and sometimes for the rest of their life.
The role of personal injury trusts
Where an individual receives compensation but may also rely on means-tested benefits or local authority support, it is often necessary to consider how the compensation is managed.
If compensation is kept in an ordinary account, it may sometimes be taken into account during means-tested assessments. For this reason, compensation is frequently placed into a personal injury trust.
A personal injury trust is a legal arrangement where the compensation is held and managed by trustees for the benefit of the injured person. The injured person is often one of the trustees as well as being the person benefitting. The injured person is the only person entitled to the funds, or any income accrued if they are invested, but the trust can help ensure the compensation is treated appropriately during financial assessments.
Compensation held within a properly established trust will be disregarded when assessing entitlement to means-tested benefits.
CGT v West Sussex County Council
CGT v West Sussex County Council [2026] EWHC 293 (Admin) considered how compensation held in a personal injury trust should be treated when a local authority assesses someone’s contribution towards their care costs if being funded by the local authority.
CGT was a young adult with severe disabilities caused by a brain injury sustained in infancy. He received more than £3.5 million in compensation, which was placed into a personal injury trust to support his long-term needs.
Years later, an application was made to the local authority for assistance with care costs. The Council decided that CGT had “too much capital” because of the Trust and should therefore pay for his care himself. It also sought repayment of over four years of previously funded care.
The High Court found that the Council’s approach was unlawful.
The court confirmed that under the Care and Support Regulations 2014, funds held in a personal injury trust must be disregarded during financial assessments. Local authorities cannot treat those funds as ordinary capital, revisit how damages were calculated, or refuse statutory support because compensation has been awarded.
The council’s decision was quashed, and it was required to repay care costs that had wrongly been taken from the Trust.
The decision reinforces that personal injury compensation exists to meet the needs arising from an injury. It is not intended to replace public support or to relieve pressure on local authority budgets. In some situations, a personal injury trust is not even required, the very fact that the funds are from compensation is enough that they have to be disregarded as capital.
If compensation is wrongly treated as ordinary savings, funds intended to support someone’s lifelong needs could be depleted far too quickly.
The case therefore provides reassurance that, when compensation is structured correctly, the law recognises its purpose and provides protection.
Cases such as this highlight the importance of obtaining specialist advice not only when bringing a personal injury claim, but also to ensure the compensation can be properly managed once it is obtained. Importantly, future considerations like this should never affect any decisions to pursue a claim, or limit the compensation that should be awarded.
Serious injury claims often involve long-term financial planning. This may include considering whether a personal injury trust is appropriate and understanding how compensation interacts with benefits and care funding.
Taking advice from solicitors experienced in these issues can help ensure that compensation is both successfully recovered and properly protected for the future. For any help with issues such as these, please contact our specialist team for advice.