[2024] UKUT 196 (AAC)

The only remaining question for the Tribunal therefore, was whether this sum of money could be disregarded for the purposes of Universal Credit entitlement, such that Miss R should have been entitled/should not have had her entitlement reduced. I found that it could not be disregarded.

I found that the money did not fall into any of the exemptions (categories of capital which can be disregarded) as set out in the Universal Credit Regulations 2013 [See Regulations 48, 75-77 and Schedule 10]. It was not, in my view, relevant as to whether the settlement sum was, or was not taxable as this was not a relevant consideration in relation to any of the legal criteria setting out whether the sum could be disregarded.

I gave particularly careful consideration as to whether the money could fall into the category of compensation for personal injury [See Regulation 75 of the Universal Credit Regulations 2013], given its provenance and given that Miss R had raised this issue in her appeal. I concluded that it could not. I note that the relevant regulation makes clear that a sum can be awarded or as a result of an agreement – this was therefore not an issue. However, the regulation also makes clear that the payment must derive in consequence of a personal injury to that person. The parts of the settlement related to statutory redundancy and loss of employment clearly fell outside of that definition. The award for injury to feelings due to discrimination was also, in my view, distinct from an award given in consequence of a personal injury. Damages paid to compensate injury to feelings is distinct from an award of damages for actual injury to physical or mental health (by way of, for instance psychiatric injury). I note and have regard to the fact that in the Judicial Guidelines for the Assessment of General Damages in Personal Injury Cases [16^th Edition] there is no category for injury to feelings which are treated as distinct from psychiatric injury.

I also had regard to the fact that the settlement agreement did not limit or terminate Miss R’s rights to pursue liability for latent personal injury arising from her employment – suggesting that this type of liability was specifically outside of the scope of the agreement.

By the time of the Decision it was also the case that the sum of money had not been placed into a trust – a requirement for compensation for personal injury to continue to be disregarded 12 months after its receipt. However even during the initial 12 months, for example had a claim been made in 2019, in my view the sum could still not be disregarded as it was not, for the reasons stated above, in consequence of a personal injury.

I therefore find as a fact on a balance of probabilities, placing reliance on the original claim form for Universal Credit and having regard to Miss R's oral evidence about the level of capital at particular periods of time, that at the date of the Decision 27 December 2020, Miss R held £10,700 in savings. I find that throughout 2019, Miss R likely held over £16,000 in savings. In each case this sum of money derived from a source that could not be disregarded. As such at the date of the Decision I found it was correct for the Department for Work and Pensions to make a yield deduction from Miss R’s Universal Credit entitlement to reflect she held £10,700 capital.

Whether or not any of the awards are subject to tax is irrelevant for UC purposes. The key factor in determining whether any of the capital can be disregarded for UC capital purposes is whether or not it falls to be disregarded under Schedule 10 of UC Regulations 2013. The payment for loss of employment cannot be disregarded under Schedule 10 of UC Regulations 2013, nor can the redundancy payment. Regulation 75 of UC

Regulations 2013 states that a personal injury payment received as a lump sum may only be disregarded if it is held in trust, administered by the court, paid in the last 12 months or has been used to purchase an annuity – none of these apply.