HMRC internal manual

Employment Income Manual

EIM06450 - Employment income: sick pay and injury payments: injury payments

Section 62 ITEPA 2003

Some employers make payments for injury instead of or as well as for sickness.

Reasonable lump sums paid as compensation for a specific injury suffered are not earnings within section 62 ITEPA 2003 and are not treated as employment income by section 403 (see EIM13610 onwards). However, payments may be taxable under the benefits code as cash benefits (see EIM21006).

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Sums which are calculated on a weekly, monthly, or similar basis and paid for periods of absence from work, or for periods after the employee returns to work when he or she is unable to earn as much as they did before the injury, will usually be taxable as earnings in the same way as sick pay (or ordinary pay when paid after the employee returns to work). The guidance at EIM06410 to EIM06430 applies.

Weekly, monthly, or similar injury payments which continue after cessation may be taxable in the same way as sick pay paid after cessation (see EIM06440).

If the injury etc was suffered at work, see EIM75080.