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Personal injury compensation payments

  1. Overview
  2. How do you qualify for the investment exemption?
  3. What payments do not qualify for investment exemption?
  4. What does the investment exemption cover?
  5. How are social welfare payments treated for investment exemption?
  6. How can you claim the investment exemption?
  7. Other issues with investment exemption

How are social welfare payments treated for investment exemption?

You may apply for the investment exemption while receiving a social welfare payment.

You may receive one of the following social welfare payments because of your qualifying injury:

  • Illness Benefit
  • Invalidity Pension
  • Injury or Disablement Benefit
  • Incapacity Supplement, while receiving Disablement Benefit.

Where this is the case, do not include these social welfare payments when calculating your total income and gains.

These social welfare payments may be increased because you have a dependent spouse, civil partner or child. This increase is also not included when calculating your total income and gains.

Certain social welfare payments, including Invalidity Pension, are taxable. For more information, see Taxation of social welfare payments. Taxable social welfare payments are not taken into account when calculating your income and gains for exemption purposes.

  • Example

    Joe is employed as a plumber. He lets two houses for a number of years. He receives a net rental income of €28,800 per year.

    He was involved in an accident on a building site which resulted in him becoming permanently and totally incapacitated from maintaining himself.

    He began proceedings against his employer and accepted €400,000 in an out of court settlement. He invested the €400,000, receiving €36,000 from the investment every year. He also receives an invalidity pension of €10,347 per year.

    In 2013, Joe claimed an exemption on his investment income.

    His total income for 2013 is:
    IncomeAmount
    Investment income €36,000
    Rental income €28,800
    Invalidity Pension €10,347
    Total income €75,147

    The Invalidity Pension is ignored when deciding if he is entitled to the exemption claimed. The total income used for his exemption claim is €64,800.

    The €36,000 investment money is now more than 50% of his total income. So he is entitled to the exemption as claimed.

    His income for tax purposes is calculated as follows:
    IncomeAmount
    Rental income €28,800
    Invalidity Pension €10,347
    Total income for tax purposes €39,147

    The investment income of €36,000 is exempt. As Joe was earning rental income from his houses prior to his injury, his rental income is not exempt.

Next: How can you claim the investment exemption?

Published: 05 May 2023 Print this page

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