Income protection insurance settlement do I pay tax?

Hippychick

I am currently in receipt of monthly income protection payments due to an illness which has rendered me unable to work.

It is unlikely that I will get better so the Company (Unum) have offered me a lump sum settlement of 100k. If I accept it do I have to pay tax on the settlement?

Thanks for any help.

Mikeyorks

The Insce company should be able to advise you .. as they handle these on a regular basis?

Sometimes these payments are subject to tax ... sometimes not. Where commuted into a lump sum the capital is not generally taxable .... but you should take advice as the sum involved is not small. If your existing payments are tax free (as is generally the case where the Insce is bought as a protection against future - as opposed to immediate - need) .... it's fairly certain the lump sum will also be non taxable

http://www.hmrc.gov.uk/manuals/iptm/IPTM6140.htm

Hippychick

thanks for the info, unum said they don't know I guess a call to HMRC will be in order.