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Generally, insurance payouts are excluded income. However, if you're covered by income protection insurance or personal sickness insurance, you may have received an insurance payout under one of these policies. You'll need to determine whether or not this amount is considered taxable income.

Income protection insurance

If your income has been affected  and you are covered by income protection insurance, you may receive an insurance payout. As this amount is to replace lost income, it's generally taxable - however, you should check the exact terms of your insurance policy to make sure.

Personal sickness insurance

Amounts paid out under personal sickness insurance policies are generally excluded from being taxable income. However, if the amount paid out is calculated in reference to loss of earnings this may be classed as taxable income.

Last updated: 28 Apr 2021
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