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bigduckontax
bigduckontax, Accountant
Category: Tax
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Is a lump sum compensation payment of a spouse whilst

Customer Question

Is a lump sum compensation payment for death of a spouse whilst working taxable please?
The payment has been made by the Norway authorities for a husband who died in an oil rig incident in Norweigan waters.
The widows pension subsequently paid has been taxed in the UK but a further lump sum has now been paid on top of the original lump sum.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer and happy to be able to help you with your question. Here is Pinsent Masons, Solicitors, [Out-Law.com] guidance on the subject: 'death, injury and disability exemption – no tax is payable on payments of death benefits, where the death brought about the termination of the employment. HMRC interpret the exemption for termination on injury or disability very narrowly.' Thus the lump sum escapes taxation. If any tax has been deducted an application should be made to HMRC for its immediate repayment. The widow's pension forms part of her income and is taxed as such in the usual way. Compensation payments for accidents are usually outside the scope of UK taxation. I do hope that my reply has been of assistance.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
Customer: replied 2 years ago.

Thank you Keith, appreciated:)

Expert:  bigduckontax replied 2 years ago.
Delighted to have been of assistance