Compensation from an accident: Is tax due and at what rate?

Miner

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A friend of mine is due some compensation from a car accident. When they get paid this will they have to pay tax on it and at what rate?
 
Re: Compensation from an accident.

Revenue leaflet [broken link removed] might be relevant in this situatoin.
 
Re: Compensation from an accident.

Thanks for that Clubman but in this case they wont be eligible for an exemption as they were only out of work for approx 6 months and is now back at work. Might ring the Revenue in any case. Thanks.
 
All the money for pain and suffering is not taxable, the only issue arising out of injury claims which could be taxable are refunds to the employer for salary paid if claimed and awarded (claiming twice), Welfare office for disability payments, social welfare UB payments (if loss of earnings has been claimed and awarded).



The area in relation to injury it is an extremely grey area, as you may never actually know if you have fully recovered from the injury, unless it is a very, very minor matter. The purpose of this money is also to recompense you for past, present and future pain and suffering, so it is not taxable.



Wonder if the offender should have charged your friend VAT on the injury? …eh



But I could imagine some plonkers ringing up the Tax man and actually paying tax out of their award. It is the age-old adage if you are giving away money someone will always be there to take it from you. I cannot remember an incident whereby someone was hauled over the coals for not payment of tax specifically for the award for injury and suffering. Take the money and bank it, then get your friend to sort out their stamps, welfare and employer payments. Most awards for loss of earnings are usually made less taxation so it would be unlikely that he received a gross settlement.
 
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