Are Personal Injury Claims Taxable?: Everything You Need to Know

If you receive compensation from a personal injury action, whether it was settled outside of court or if it had been awarded by a Court or where there has been an order to pay under Section 38 of the Personal Injuries Assessment Board Act 2003, your sum may not be subject to tax*.

However, there is an incorrect general view that all funds arising out of compensation payments are exempt from Irish tax.

In reality, there are specific tax exemptions set out in Irish legislation to determine whether or not a party in receipt of compensation will be subject to pay tax on their personal injury award.

Are Personal Injuries Claims Subject to Income Tax?

According to the Taxes Consolidation Act 1997, the actual sum received as compensation for a personal injury is not directly subject to tax.

However, income obtained from the investment of the compensation could be subject to income tax unless the individual has been permanently and totally incapacitated by mental or physical infirmity from maintaining themselves.

It is important to note that even if the exemption applies, the income and gains concerned must be included in the individual’s tax return.

Are Personal Injuries Claims Subject to Capital Gains Tax?

The Taxes Consolidation Act 1997 states that any sum obtained by means of compensation or damages for any wrong or injury suffered by an individual shall not be classified as “chargeable gains” and as such are not subject to Capital Gains tax in Ireland.

How Much Do Insurance Companies Pay for Personal Injury Claims?

The value of your claim would be dependent on the extent of your injuries and all circumstances surrounding the accident should be considered.

Several factors can bear significant weight on the value of your claim:

1. Liability

Where a Claimant’s solicitor can provide proof with great certainty that the Defendant is responsible for the accident and injuries that occurred, settlements will usually be higher. If an individual had contributed to the accident, this could reduce your compensation.

2. The Severity of the Injury & Psychological Effect

A more severe injury will produce a larger settlement/award. For example, broken bones and other intense injuries will lead to higher compensation than injuries equating to whiplash, bruising, soft tissue injuries, etc. Similarly, where injuries are deemed to be permanent, such as amputation, brain injury, etc, one could expect to be awarded a larger sum.

The psychological aftermath of suffering an injury can be just as severe as physical injuries. Proving that an individual is suffering psychologically following an accident can be difficult and will require the assistance of vocational assessors, psychologists, etc. However, where it can be proven that the individual is suffering from a psychological standpoint, this will usually have a bearing on the overall compensation.

3. The Effect on your Daily Life

Claimants whose lives do not drastically change following their accident will receive less compensation than those whose everyday lives are affected following their injury.

4. Recovery

The length of time it takes for an individual to recover is an important factor. Longer recoveries lead to more medical appointments and treatment, which will lead to more compensation. Likewise, where there is significant treatment including doctors, physiotherapists, surgeries, etc, larger compensation sums will occur.

5. Loss of Earnings

Where an individual was unable to work following the accident and whether or not they will be able to return to their pre-accident employment situation will be considered and the loss of earnings both to date and into the future will be examined. It would be wise to have an actuary’s opinion in this regard.

6. Medical Bills & Out of Pocket Expenses

Medical bills both past and future, out-of-pocket expenses, such as travel expenses, medication, etc for both past and the future will be considered.

The Judicial Council’s personal injury guidelines were introduced by the Judicial Council on 6th March 2021. These guidelines provide us with general guidelines as to how much compensation may be awarded in a personal injury claim and is used by the Personal Injuries Assessment Board when making their assessment.

Does a Personal Injury Claim Affect Benefits?

Many benefits in Ireland are means-tested, which means your eligibility to claim some benefits and how much of that benefit, will depend on how much capital you have. Your income and savings and other sources of capital will be considered. A lump sum figure from a personal injury settlement would be classed as capital and as such, could be a factor if you were means-tested for Welfare and Social benefits.

Does a Personal Injury Claim Affect Insurance?

If you are pursuing a personal injury claim, it will be against the motor insurance policy of the Defendant. As such, your motor insurance policy would not be affected.

If you have a claim, it may increase the cost of your car insurance premium when you are looking for a renewal option. In addition, your No Claims Bonus may be affected, but this is dependent on your policy. You should check your insurance policy document for more information.

Who Pays Costs in Personal Injury Claims?

Where you are successful in your personal injury claim, it is the responsibility of the wrongdoer to pay the injured party’s costs. The Defendant will cover the legal costs in addition to the compensation itself.

Some expenses may not be covered by the defendant, such as expert report fees, the initial application to the Injuries Board, and some outlay. These expenses may come out of your compensation.

How to Claim Compensation for Personal Injury?

Firstly, it must be established whether an injury has occurred. To bring a personal injury claim, you must have suffered an injury, whether physical or psychological.

Once it is clear you have suffered an injury, you should seek the relevant medical treatment for said injury. All details of the accident should be recorded and reported at the time, including any witnesses of the incident.

We recommend that you contact an experienced solicitor, such as HOMS Assist and get them involved at an early stage to advise you and guide you through the process.

The Personal Injury Assessment Board assesses most personal injury claims before legal proceedings are issued and your solicitor will guide you through this process and beyond.

How Long Does A Personal Injury Claim Take?

Many factors can affect the length of your personal injury action. Some of them are:

  1. The time taken by the Personal Injuries Assessment Board (PIAB) to respond to the initial application made by your solicitor
  2. The time taken by the Defendant’s insurance company to review the case
  3. Your solicitor gathering expert reports to efficiently run your case
  4. Time taken by legal proceedings If you or the Defendant’s insurance company reject PIAB’s assessment
  5. If your Injuries have not recovered and you are still symptomatic, more reports are required to obtain further prognosis for your injuries

What Is the Time Limit for Personal Injury Claims?

The time limit for making a claim, which is referred to as the statute of limitations, states that a case must be started within two years from the date of the accident.

There are some exceptions to this rule:

  • Where an injured party only became aware that they were injured sometime after the accident.
  • The injured party had no way of knowing who had injured them or who was at fault for the accident.
  • When a minor is involved in an accident, if their parent or guardian has not pursued a case on their behalf, they can then start the claim process when they turn eighteen and their two-year time limit will start when the child turns 18.

While you may not be in a position to instruct a solicitor immediately following the accident, it is important to consult as soon as you are ready to begin the process and avoid your claim being statute-barred and outside the two-year time limit.

How HOMS Assist Can Help

Our team at HOMS Assist can help you in your personal injury claim through our expert knowledge of the procedure and a simplified process of bringing a case from an initial consultation through to completion.

Trusting our knowledge in the area and allowing us to progress with your case will allow you to focus solely on your recovery, without the stress of worrying about your personal injury action.

If you or your loved one are thinking of making a personal injury claim, we may be able to help.
With over 50 years of expert legal experience advising clients, we are here to provide expert advice when you need it most.
Call us today on 1800 207 207 or contact us online to have a confidential conversation.

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2-4 Ely Place, Dublin 2, D02 FR58


Bishopsgate, Henry Street, Limerick, V94 K5R6


1A South Mall, Cork, T12 PV44

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