Skip to main content
  • What We Do
    • Investment Management
    • Financial Planning
    • Trust and Tax
    • International investment
    • Greenbank - Ethical and sustainable investment
    • Asset Management
    • PERSONAL INJURY AND COURT OF PROTECTION
  • Our Clients
    • Individuals and Families
    • Charities
    • Financial Advisers
    • Professional INTERMEDIARIES
    • Entrepreneurs
  • About Group
    • About us
      • Rathbones Group
      • Saunderson House
      • Our Purpose
      • Partnerships
      • Our Offices
      • Events
        • All events
        • Financial awareness courses
      • Our story
    • Responsibility
      • Responsible Business
      • Responsible Investment
      • Climate Reporting
      • Reports
    • Investors
      • Investor Relations
      • Reports and Results
      • Shareholder Information
      • Investment Case
      • Financial Calendar
      • Share Price Information
      • Contacts and Offices
    • Governance
      • Group executive committee
      • Board Committees
      • Directors
      • Policies
      • Articles of association
      • Corporate Governance
    • Media Centre
    • Careers
      • Vacancies
      • Investing in our people
      • Working at Rathbones
      • Your Career
      • Early Careers
    • Our People
  • RATHBONES
  • Insights
    • Knowledge and Insight
    • Rathbones Review Winter 2025
    • Know Where Life Can Take You
    • Insights
      • Investment insights
      • Investment Reports
        • Polls apart: Navigating America’s divisive election
        • Investing for the next decade
        • Peace of mind in a dangerous world
        • Building a more sustainable future
        • The Cloud Revolution
      • Financial Planning Insights
      • Financial Wellbeing Research
      • Responsible investment insights
      • Earth Convention
    • Podcasts
      • Financial Planning Unlocked
      • Inspired Minds
      • Inspired Sounds
  • Contact
    • Contact Us
    • Our Offices
  • Client Portals
    • About our client portals
    • MyRathbones Login
    • Rathbones Financial Planning Online Login
Home Home

Search

  • What We Do
    • Investment Management
    • Financial Planning
    • Trust and Tax
    • International investment
    • Greenbank - Ethical and sustainable investment
    • Asset Management
    • PERSONAL INJURY AND COURT OF PROTECTION
  • Our Clients
    • Individuals and Families
    • Charities
    • Financial Advisers
    • Professional INTERMEDIARIES
    • Entrepreneurs
  • About Group
    • About us
      • Rathbones Group
      • Saunderson House
      • Our Purpose
      • Partnerships
      • Our Offices
      • Events
        • All events
        • Financial awareness courses
      • Our story
    • Responsibility
      • Responsible Business
      • Responsible Investment
      • Climate Reporting
      • Reports
    • Investors
      • Investor Relations
      • Reports and Results
      • Shareholder Information
      • Investment Case
      • Financial Calendar
      • Share Price Information
      • Contacts and Offices
    • Governance
      • Group executive committee
      • Board Committees
      • Directors
      • Policies
      • Articles of association
      • Corporate Governance
    • Media Centre
    • Careers
      • Vacancies
      • Investing in our people
      • Working at Rathbones
      • Your Career
      • Early Careers
    • Our People
  • RATHBONES
  • Insights
    • Knowledge and Insight
    • Rathbones Review Winter 2025
    • Know Where Life Can Take You
    • Insights
      • Investment insights
      • Investment Reports
        • Polls apart: Navigating America’s divisive election
        • Investing for the next decade
        • Peace of mind in a dangerous world
        • Building a more sustainable future
        • The Cloud Revolution
      • Financial Planning Insights
      • Financial Wellbeing Research
      • Responsible investment insights
      • Earth Convention
    • Podcasts
      • Financial Planning Unlocked
      • Inspired Minds
      • Inspired Sounds
  • Contact
    • Contact Us
    • Our Offices
  • Client Portals
    • About our client portals
    • MyRathbones Login
    • Rathbones Financial Planning Online Login
Home

Search

Universal Credit and trusts: important changes

Abigail Cuffe of Vincents Solicitors highlights how trusts and income received from a trust are assessed for new Universal Credit claims.

By Abigail Cuffe, Vincents Solicitors 13 March 2024

Breadcrumb

  1. Home
  2. Knowledge and Insight
  3. Universal Credit and trusts: important changes

Article last updated 18 March 2024.

Since its introduction, Universal Credit, which aims to support individuals who are on low incomes, are unemployed or can’t work, has replaced all means-tested (income-based) benefits for new claimants. The implementation of Universal Credit has resulted in various changes to the ways in which certain trusts and income from trusts are treated in respect of benefit claims.

Abigail Cuffe of Vincents Solicitors highlights the key changes that deputies and trustees need to be aware of, and the potential impact on clients and their families.    

 

Personal injury trusts

Personal injury (PI) trusts continue to be disregarded under Regulation 75(4) of the 2013 Universal Credit regulations. Any income received by a claimant from a PI trust is fully disregarded for the purposes of a Universal Credit claim. There is no time limit for placing funds in a PI trust as long as the funds form part of the compensation award. This means that any funds placed in the trust after the 52-week disregard has expired should have no detrimental impact on the client in terms of a means test.  

 

Discretionary trusts and deprivation of capital

Discretionary trusts were previously disregarded for the purposes of income-based benefits. However, this is no longer the case: these trusts are increasingly being treated as deprivation of capital – i.e. using the trust to purposefully reduce capital in order to be eligible for Universal Credit benefits.  

The guidelines state that when working out if a trust will be treated as capital, decision makers should consider who the beneficial owner of the trust is and who has an interest in the trust, including contingent interest. As such, all trusts and their documentation need to be disclosed as part of a Universal Credit claim. The terms of the trust will then dictate if it can be disregarded for the purposes of Universal Credit.  

 

Trust income

As there was previously no specific guidance on how trust income should be considered in relation to a means test, payments made to a claimant who is a beneficial owner of a trust have, unless significant, been treated as ‘voluntary payments’ for the purposes of income-based benefits.  

However, under Regulation 66 (i)(j) of the Universal Credit regulations, all regular income a claimant receives from a trust must be declared as ‘unearned income’. The Universal Credit award will then be reduced by the amount that is received from a trust. In other words, if a claimant receives a monthly income from the trust that exceeds the Universal Credit award, they will not be able to claim any benefits.  

Regulation (1) (j) also states that if the trust yields any income – for example interest, dividends or rental payments – this also needs to be declared in full as ‘unearned income’ and will be regarded as either income or capital for the purposes of the Universal Credit claim. The only exception to this regulation relates to PI trusts, as mentioned above.  

 

Next steps

These changes may affect an individual’s ability to claim Universal Credit.  Deputies and trustees should seek specialist advice if they have any concerns about a client’s eligibility to state benefits.   

Popular Articles

image of shipping containers in a shipping yard from above
4 April 2025

Trump’s tariffs: how should investors respond?

Stock markets have reacted badly to the worse than expected news on US trade policy. We favour a more conservative asset allocation in response – but it’s possible to be too gloomy.

Find out more

5 mins

Golden crown on black background
7 April 2025

Review of the week: The emperor's new tariffs

Markets are tumbling fast in response to US tariffs that will upend global trade. Perhaps more dangerous than the policy itself is just how silly it makes the administration look.

Find out more

9 mins

Black wire-framed spectacles, a white calculator and a gold pen lie on a light blue accounting ring-binder folder
6 May 2025

Review of the week: End of an era

Arguably the best investor of all time has decided to retire at the end of the year. Meanwhile, UK interest rates are forecast to fall in a bid to prop up the economy.

Find out more

6 mins

MOST READ
  1. Trump’s tariffs: how should investors respond?

  2. Review of the week: The emperor's new tariffs

  3. Review of the week: End of an era

  4. Review of the week: Gloves off?

  5. A spring statement on fiscal discipline

Let's Talk

Ready to start a conversation? Please complete our enquiry form, we look forward to speaking with you.

Enquire
  • Important Information
    • Modern Slavery Statement
    • Important information
    • Complaints
    • Privacy
    • Accessibility
    • Climate Reporting
    • Cookies
    • Cookie Preferences
    • Sitemap
  • Other information
    • Financial Services Compensation Scheme
    • Financial Ombudsman Service
    • Scam Smart
    • Keeping our clients safe
    • MiFID II Cost and Charges FAQ
    • Statement of Cost and Charges
    • Banking Services
    • Interest Rates
    • Consumer Duty Manufacturer Request for Information
Address

Rathbones Group Plc
30 Gresham Street
London
EC2V 7QN

© 2025 Rathbones Group Plc
Incorporated and registered in England and Wales.
Registered number 01000403

Follow us
Facebook Instagram LinkedIn Twitter Youtube

The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.