Postby robbob » Wed May 16, 2018 4:25 pm
It tends to be the taxable statutory interest added that creates the tax problem/brucie bonus (20% tax may or may not have been deducted) , if you use 8% pa official rate and say claims are 5-6 years old on average the interest could easily be 50% of the overall payout. I am presuming the compensation will not normally automatically be taxable in itself but it may depend on the exact circumstances - eg if it was refunding premiums which originally secured a tax deduction due to being trade related ?
One random example
https://www.citizensadvice.org.uk/debt-and-money/tax/what-is-taxable-income/taxable-and-non-taxable-income/
compensation or damages awarded for personal injuries whether received in one lump sum or over a period and whether awarded by a court or out of court settlement
further info
https://www.moneysavingexpert.com/news/reclaim/2011/11/got-a-ppi-payout-you-probably-owe-tax