Accident Advice Helpline has been helping people claim compensation for accidents at work or on the roads for over 16 years, and one of the most common questions we are asked is, ‘Do you have to pay tax on personal injury claims?’ If you have been injured and somebody else was at fault for your accident, you could find yourself with several financial questions that you need answers to, so we’ve come up with this brief guide to help you find out if you need to pay tax on personal injury claims, as well as answer some of the most common questions we are asked regularly.
Is tax on personal injury claims payable in any circumstances?
Personal injury settlements are always tax-free, up to the £500,000 cap put in place by HMRC. You can apply to have this cap extended if you have received a larger settlement, but you will need to meet several criteria. If you receive a larger settlement, it is a good idea to seek advice from a qualified Financial Advisor, to ensure that you are investing your money in an account with the highest possible rate of interest.
Can you claim benefits if you’re unable to work because of an injury?
As well as the tax on personal injury claims question, this is one of the questions we are asked most frequently at Accident Advice Helpline. If you are unable to go to work after your accident – for example if you work in construction and you have suffered a dislocated shoulder after a fall – you will normally be entitled to Statutory Sick Pay from your employer. You’ll need to show them evidence of your injury or illness, usually in the form of a doctor’s note, but it’s important to remember that you can only claim Statutory Sick Pay for two months. If you have been seriously injured in an industrial accident, for example whilst working in a factory, you may be able to make a claim for Industrial Injuries Disablement Benefit, depending on the severity of your injuries. In order to do so, you’ll need to visit your local Jobcentre Plus to fill out two forms:
- Form B100A – ‘Industrial Injuries Disablement Benefit for an accident at work’
- Form B195 – ‘Declaration of an accident at work’
You have six months from the date of your accident to make a claim. You may also be entitled to other benefits, and it’s best to visit the Gov.uk website for more information. If you later decide to make a personal injury claim then you may need to pay back any benefits you have received, and the rules about deductions from benefits can be complex. You can visit your local Citizens Advice Bureau for more information.
What if you are injured in a workplace accident?
It is up to your employer to keep you safe at work, and if you have been injured and feel more could have been done to prevent your accident from happening, you could find you are entitled to claim compensation for your injuries. If your employer has been negligent or breached health and safety guidelines then you are likely to receive a more substantial sum in compensation than you would by claiming industrial injury benefits. Your employer’s insurers will normally be responsible for deducting any benefits that you have received from the amount of compensation that is paid to you, and these will be refunded to the government.
There is a leaflet GL27 ‘Compensation and Social Security Benefits’ available from the Department of Work and Pensions, which further explains this in more detail. Many people hesitate to make a claim against their employer, as they are worried about repercussions or losing their job, or even stressed about paying tax on personal injury claims compensation. Employers have insurance in place to cover them in the event of a claim, and there are laws in place to protect you if you decide to claim personal injury compensation, so there is no need to worry.
Should you claim compensation after your workplace accident?
Some work environments are more dangerous than others; for example, working on a building site or in a factory could be more dangerous than being employed in an office. The most common workplace injuries sustained are repetitive strain injuries, entanglement with machine injuries (for example, in a factory), and vehicle accidents, but slips and trips and falls from height are also common. You should seriously consider making a personal injury claim if your employer has been negligent and failed to keep you safe, as you are entitled to compensation not only for your injuries but also for your loss of earnings.
There is a three-year time limit in place to make a claim, so it’s best to get in touch with a lawyer as soon as possible after your accident; you can get no-obligation advice from Accident Advice Helpline. Remember also that tax on personal injury claims compensation isn’t payable, so making a claim could help your family out financially if you are unable to work after your accident.
Should I claim compensation or disability benefit?
Many people are unsure whether claiming state benefit or making a personal injury claim is a wiser move after an industrial accident. To some extent it will depend on the severity of your injuries, but generally speaking you will receive more money by making a claim for compensation than you will claiming state benefit for your injuries, even though Industrial Injuries Disability Benefit is not means-tested or National Insurance based. You won’t pay tax on personal injury claims compensation either, which is another thing to bear in mind. If you decide to claim benefit for industrial injuries disability, you will normally be assessed by a medical advisor.
They will calculate the level of your disability using a percentage ranging from 0% to 100% – you must normally be assessed as 14% disabled or more in order to qualify for any benefit at all. The weekly amount payable ranges from over £160 for 100% disabled to around £30 for 20% disabled, so it’s easy to see how a personal injury settlement could be a better move, particularly if you have suffered loss of earnings.
Get in touch with us today
You can call Accident Advice Helpline at any time after your accident on 0800 689 5659 and we’ll be able to tell you if you have a viable claim for compensation. It’s free to call and because our lawyers work on a no win no fee basis, you have one less thing to worry about.