Does this count as part of taxable income?

B0bbyEwing

I've never had to think about moving out of the 20% tax bracket before but I might have to for this coming tax year, depending.

Story short I've got a claim going on which looks like it's about to finally get settled.

If you take that claim figure & add it to what I earned this tax year then I'm just a few £100 short of the 40% threshold.

With the minimum wage going up next month, barring a significant time off work then I will very likely tick over that amount if you combine my wage plus this claim payout.

Does a claim work in that manner or is it not considered 'income' in this way?

This is without even talking about interest from savings accounts.

SiliconChip

Wnat sort of a claim? Without knowing that it's impossible to say whether it's taxable income or not. Although we can say that non-ISA savings interest definitely is (although may be taxed at 0%).

flaneurs_lobster

Does a claim work in that manner or is it not considered 'income' in this way?

It depends on the nature of the incident for which compensation is payable.

So (eg) most personal injury compensation claims would be tax-free but compensation for mis-sold investment products or investment loss is generally taxable.

Can you be more specific?

Keep_pedalling

Sorry I don’t have a crystal ball so don’t know what sort of claim it is, so can’t answer the question.

B0bbyEwing

https://forums.moneysavingexpert.com/discussion/comment/81923806#Comment_81923806

No need to get clever about it.

What does your post actually offer to the thread? 2 people before you said the exact same thing without the smart attitude so what does your post actually bring that the other 2 responders didn't cover aside from showing you up to be a clever so-&-so? If you don't want to help or can't help without the attitude then that's fine - simply don't bother coming back to this thread. Job done.

For the other two who replied - thanks for your posts because I wasn't even aware that it might matter depending on the claim. As this is the first time I've claimed anything I just thought all claims would be the same in terms of how they're seen as income (or not).

I can't tell you what type of claim it is as I don't know what it's categorised as. All I can tell you is what it's for & hope that you can do something with that info.

Basically I'm claiming against a driver for injuries sustained to myself due to the collision & also loss of earnings as a result of the time off the injuries caused.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81923896#Comment_81923896

Blog below should assist in determining whether personal i juries compensation is subject to income tax - the general position is its not as long as the the loss of earnings component is calculated on a net after tax basis

https://www.jflaw.co.uk/legal-glossary/is-compensation-taxable/#:~:text=No%2C%20personal%20injury%20compensation%20isn,little%20later%20in%20the%20guide.

B0bbyEwing

https://forums.moneysavingexpert.com/discussion/comment/81923946#Comment_81923946

Thanks. I'm not sure how it's been calculated to be honest.

I've asked my solicitor this same question but the response process isn't very swift so I'm asking here as well.

The loss of wages is more than the injury section of the claim but if either of them don't count towards it (haven't clicked your link yet) then I'll be good because my wage really shouldn't jump by that much unless my employer breaks tradition and pays us a bit over minimum wage.

SiliconChip

If you're on or near minimum wage then any taxable component of the award would need to be significant (probably at least £25,000) to take your taxable income into the higher rate bracket.

B0bbyEwing

https://forums.moneysavingexpert.com/discussion/comment/81923978#Comment_81923978

Oh I totally didn't even think of that. I just thought my whole earnings + this payout but your post made me realise it's not that at all. Its my earnings after 12k-ish isn't it?

So on 32k that's only 20k + this payout.

Roughly speaking. Right?

That'll be me looking daft to the solicitor then but oh well.

FrugaiMacDugal

You only pay the higher rate on whatever goes over the higher rate.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81924074#Comment_81924074

Or not depending on the amounts and type of income 😉