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      07-19-2018, 05:50 AM   #1
vaucist
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Tax on insurance payout?

Hi all, I recently wrote off (very conveniently) my '15 VW up! in an RTC where I wasn't at fault. I paid off the finance for it a few months back and got full current value of the car back with very little messing around.

However, someone's told me that the money from this is taxable, and now I'm a little confused and concerned. Using a tax tool, I've worked out what I would pay from it and it's a little bit saddening lol. Can someone confirm whether I should be paying tax on it or not?

Many thanks!
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      07-19-2018, 07:32 AM   #2
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Seems your accountant would be a good resource.
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      07-19-2018, 10:12 AM   #3
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I would very much doubt its taxed.
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      07-19-2018, 10:16 AM   #4
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I don't know for sure but I'd think the only taxable part of a settlement would be if there was a portion to cover time off work as you wouldn't be earning and paying paye tax.

I've have settlements (and bought the car back) and never paid tax as the settlement is paid to put you in exactly the same position before the accident.

Why get penalised for something that wasn't your fault?

Last edited by Dave-ncl; 07-19-2018 at 12:00 PM.
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      07-19-2018, 10:30 AM   #5
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If it’s a company car and the insurance payout is more than the company asset value at the time, then it could be?
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      07-19-2018, 10:55 AM   #6
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No, it is reimbursement for the capital value of the asset to put you back in the condition you would have been...

If it was a company car then you will have to go down the route of disposal of asset and the insurance payout is disposal proceeds which will determine if you have a balancing charge or allowance...

If it was a private car, then its just like if you sold the car - you are effectively selling the written off car to insurers for a value akin to buying it back - do you declare sale proceeds for a car on your tax return normally?

No CGT on cars either so even if sold for more than bought for not a taxable transaction!
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