Is an out of court settlement for a contested will taxable or non-taxable income?

Soar_2

Do I have to declare £25000 from an out of court settlement after successfully contesting my fathers will ?

Thanks

John_Pierpoint

I think we need to know a few more details of what you successfully claimed?
Presumably the compensation cheque did not come with an R185 tax certificate?
Try putting "Tax on compensation" into Google.

dzug1

Well I'd say it's neither - it's not income at all but a capital payment which would be non-taxable.

So from the tax pov it doesn't need to be declared

lordbase

Assuming the result was that you received an inheritance from your father's estate and that there were sufficient liquid assets to pay any IHT then you should receive the inheritance free of tax.

If it is a compensation payment, compensation is generally free of tax as well.

Give us a bit more detail and we might be able to help further.

Soar_2

Thank you for your replies.

My father left all his money to 2 charities, and I contested the will (or threatened too, the case didn't actually get to court) on the basis that he had some responsibility to help with my financial situation, but then settled out of court with the charities for £25000.

I dont know if it is considered a compensation payment or not. My solicitor seemed to think it was taxable.

I guess the point may be that the money is not actually considered to be coming from my fathers estate, but from the charities that made the out of court settlement payment?

I'm not sure if these are the details you need?

John_Pierpoint

How long was the gap between your father's death and you getting the "compensation" ?

Who was the executor of your father's will?

Did both charities contribute to this payment?

I have mentioned your thread in this thread.

https://forums.moneysavingexpert.com/discussion/3432339

[I once received some "compensation" and I am pretty well sure that some of it should have had standard rate income tax deducted from it, as I think it included an element of interest because of the delay on reaching a settlement.

But as all I got was a cheque and a compliments slip with a squiggle of explanation on it, I banked it. I was fed up arguing with the incompetent tight fisted organisation paying the compensation.
My advisor then had a fiasco before getting his fees paid, though these were clearly a separate amount from the settlement]