Are you residing in the UK? If yes, you probably must have an idea what taxable and non-taxable incomes are. But, I bet you may not have full knowledge on these incomes.

There are many incomes like welfare benefits, interest and income from savings and investments which are non-taxable. Likewise, some social security benefits and pensions, work-related income, and some interest on savings are taxable incomes.

Among these incomes, personal injury compensation is one such hot topic where most of you want to know whether it’s non-taxable or not. Any disease and impairment of a person’s physical or mental condition is included in the personal injury. So, to all of you, here is your answer: Personal injury compensation is non-taxable. This means you are not liable to pay any taxes on these payments.

Whether such payments is received in one lump sum or through periodic payments awarded by a court or out of court settlement; this compensation is non-taxable and can be ignored for any tax payments.

In addition to that, interest up to the time of the judgment awarded by a court in compensation for personal injuries is not liable for tax. However, if there is any delay in the payment of the award, then the interest paid is taxable. This is why you need to watch out for the interest.

If you want more information on the taxable and non-taxable incomes in the UK, feel free to contact our tax accountants today.