Compensation for injuries at work

Produced by Tolley in association with Paul Tew
Compensation for injuries at work

The following Employment Tax guidance note Produced by Tolley in association with Paul Tew provides comprehensive and up to date tax information covering:

  • Compensation for injuries at work
  • Introduction
  • Compensation payments
  • Lump sums
  • Ongoing payments
  • Injuries to feelings

Introduction

If an employee is injured as a result of something that happens at work then, in certain circumstances, compensation payments can be made to them which have no income tax, NIC or reporting requirements.

Issues regarding compensation payments for injuries suffered at work are covered in EIM06450.

Compensation payments

Lump sums

There are no income tax, NIC or reporting requirements associated with compensation payments for injuries suffered at work as long as all the following requirements are satisfied:

  1. the payment to the employee is of the same nature and magnitude that would be made to a member of the public suffering the same injury

  2. the employee has no contractual right to the payment under their terms of employment

  3. it follows negotiations between the company and the employee, or their representative, about the nature of the compensation payment

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