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    "If you've been injured through no fault of your own you could be entitled to compensation. If you're unsure if you could claim, I recommend you call Accident Advice Helpline."

    Esther Rantzen

    Is money from a personal injury lawsuit taxable?


    Many people who receive injuries in accidents other people were responsible for causing go on to claim compensation for those injuries. They might also wonder if that compensation will be liable for tax, and this is a reasonable question to ask. We’ll look into this element in more detail here.

    Is money from a personal injury lawsuit taxable?

    Yes, but only on the interest that may accrue on the compensation amount between the date of the accident and the date the injured party receives their compensation. Thus, you would not pay tax on the compensation, but you may pay it on the interest received for that compensation if there was a delay in receiving it.

    The best course of action is to consult your accountant once the compensation is received. They will guide you in what must be declared if you complete a tax return. This would usually be the interest received on a delayed settlement, as you would have paid tax on the interest anyway if it had been sitting in your account for however many months have passed since the date of your crash.

    The actual compensation amount awarded would not be liable for tax, so this main amount would be tax-free. It is understandable that you might still be confused at how this works, though, which is why we would still recommend you get advice from a tax professional if you want to know more.

    Focusing on the compensation you could potentially receive

    Compensation amounts can vary hugely depending on how bad the injuries are, how they affect the injured party, and how long they affect them for. Many minor injuries heal quickly – perhaps within days or weeks. Other serious injuries can last for months and perhaps even leave the person with problems they must adjust to throughout the rest of their life.

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    The compensation awarded for such claims will take these elements into account. By contacting a personal injury lawyer and telling them what happened to you, you can find out what might be possible to claim, and discuss the element of tax on personal injury compensation.

    We are here to help you find out more about your situation

    It is only natural to have questions about the situation you have ended up in because of your accident. A personal injury lawyer can guide you through the situation and recommend your next steps. Here at Accident Advice Helpline, we have trained advisors standing by to answer your call on 0800 689 0500. That is our free enquiry line, but if you only have access to your mobile phone, you can ring instead on 0333 500 0993. By calling us and asking more about the chances of making a no-win, no-fee* claim, you can see whether you could receive compensation for your injuries. Knowing what to expect in compensation, and how tax applies to compensation payments, means you will understand how the process works when you make a claim.

    Category: Personal injury claims

    Accident Advice Helpline (or AAH) is a trading style of Slater Gordon Solutions Legal Limited. Slater Gordon Solutions Legal Limited is a company registered in England and Wales with registration number 07931918, VAT 142 8192 16, registered office Dempster Building, Atlantic Way, Brunswick Business Park, Liverpool, L3 4UU and is an approved Alternative Business Structure authorised and regulated by the Solicitors Regulation Authority. Authorised and regulated by the Financial Conduct Authority.

    Disclaimer: This website contains content contributed by third parties, therefore any opinions, comments or other information expressed on this site that do not relate to the business of AAHDL or its associated companies should be understood as neither being held or endorsed by this business.

    No-Win No-Fee: *Subject to insurance costs. Fee payable if case not pursued at client's request.