A guide to personal injury trusts

Clients who suffer personal injuries and are awarded compensation are often advised to set up what is known as a “Personal Injury Trust”. There are a number of reasons for doing this and to find out more, please read the blog here – Personal Injury Trust.

However, we are often asked how exactly do you use a Personal Injury Trust, once it has been set up?

Bank account

At it’s most straightforward, a Personal Injury Trust takes the form of a separate bank account. The account should be in the name of your Trust, for example “The Joe Bloggs Personal Injury Trust 2021” so that it is clear any money held in that account belongs to your trust and not you directly. This ensures any money held in the trust does not get taken into account when calculating your eligibility for means tested benefits.

Your chosen Trustees will have access to the account, so when you want to spend your compensation, you need to ask your Trustees to sign a cheque, call the bank, or make the payment by online transfer. The exact options available will depend on the bank you use to set up the account.

It is crucial that if any payments are made to you, they should not increase the savings in your own name to above £6,000 as this is typically when you would start to lose your means-tested benefits.


If you have been awarded a lot of compensation, you will probably want to consider investing some or all of it so that it can grow over time, or provide you with a regular income. Once invested, assets (and any income generated by them) will remain protected by the Personal Injury Trust, so long as they are invested in the name of your Trust, and so you will be able to continue receiving your means-tested benefits.


If you would like to use your compensation to buy a property (whether to live in or rent out) it is a good idea to keep that property within your Trust so that it is always protected. Therefore, when you purchase a new property, you should tell your solicitor to register it in the names of your Trustees and put a note on the title to make clear it is held within your Personal Injury Trust.

Tax issues

Once you have created a Personal Injury trust, you will need to consider the additional tax issues that may arise. Depending on the type of trust and the amount of compensation you receive, you may need to complete an annual Tax Return to HM Revenue & Customs.

How we can help

You can go to any bank and ask them to open a Trust bank account for you, but not all banks offer this service and we find many clients have difficulty open the correct kind of account. We are happy to assist you with the process of opening the bank account. We can also assist you with any questions you may have regarding the tax treatment of your trust.