Where a lump sum payment on termination is not chargeable to income tax under ITEPA 2003, s 62, or under sections 401–416 or under any of the other headings listed in (b) to (e) of E4.802, it is necessary to consider whether the payment could be chargeable to capital gains tax. TCGA 1992, s 37(1) excludes from capital gains tax a payment which has been charged to income tax; see C2.102. For HMRC guidance on the interaction with capital gains tax, see EIM13650.
Compensation or damages for any wrong or injury suffered by an individual in his person, profession or vocation are expressly exempted from capital gains tax1. In HMRC's view2, the words 'wrong or injury' in this context include breaches of contractual duties in addition to torts. A wrong or injury suffered by an individual 'in his person' can cover more than physical injury, but must be distinguished from a wrong or injury suffered 'in
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