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Income Tax (Trading and Other Income) Act 2005

Section 751: Interest on damages for personal injury

2847.This section provides an exemption from income tax for interest on damages for personal injury or death. It is based on section 329 of ICTA.

2848.The source legislation deals with interest on damages awarded by reference to various enactments. Subsection (1) omits those statutory references. It was never intended to limit the scope of the exemption to particular enactments: the policy was to include any Act under which interest on damages for personal injury could be awarded. See Change 121 in Annex 1.

2849.Section 329(1)(a) and (b) of ICTA limit the exemption to the interest included in a sum for which judgement is given. Subsection (1)(a) refers simply to “a sum awarded by a court”. Subsection (1)(b) makes it clear that interest which may arise from the date of the award is not included in the exemption.

2850.Subsection (1)(c) gives statutory effect to ESC A30 (interest on damages for personal injuries (foreign court awards)). See Change 125 in Annex 1.

2851.Subsection (2) is based on section 329(3) of ICTA and extends the exemption to interest in respect of payments in satisfaction of a cause of action.

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