Half of the settlement was general for damages and the other half was for proven loss of earnings. The settlement has been paid. How much, if any, do I show on my tax return?
2007-08-22 04:18:10 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United Kingdom
Nothing, the Loss of Earning Compensation will have been calculated as being a net amount (ie after tax etc)
I do wish people wouldn't give American answers under the UK topics !
2007-08-22 09:34:27 · answer #1 · answered by Philip W 7 · 1⤊ 0⤋
This depends on whose side you are on.
Insurance companies take it upon themselves to deduct tax and NIC from claims for loss of earnings. They do not however remit these to HMRC, and they have no legal basis for doing this.
Awards for loss of earning made by the Court are subject to deductions and the net amount is not taxable. Awards made by Insurance companies are taxable according to HMRC, and if you've suffered deductions you have been bilked.
Go back and claim the full amount and declare it on your tax return. Please note you can also use this income as pensionable earnings, so any deductions by third parties will limit this relief illegally.
2007-08-24 12:53:54 · answer #2 · answered by Do not trust low score answerers 7 · 0⤊ 0⤋
You should have to pay taxes on the lost wages part of the settlement. The company who paid the settlement should report it to the IRS and you should recieve a 1099 at the end of the year. If you had an attorney for the settlement, you should check with his office.
2007-08-22 11:22:13 · answer #3 · answered by virgo1565 2 · 0⤊ 2⤋