Expenses and benefits: compensation for injuries at work

If your employee is injured at work and you pay them compensation, you don’t have to report these payments or pay tax or National Insurance as long as certain conditions apply.

You won’t have to report to HM Revenue & Customs or pay tax and National Insurance if:

• the payment is in return for the employee’s agreement not to make a legal claim against you
• the employee isn’t automatically entitled to the payment under their employment contract
• you would have had to make the same payment to a member of the public under similar circumstances
• you and the employee discussed and negotiated appropriate compensation

Technical guidance

The following guides contain more detailed information:

• employment income: sick pay and injury payments - injury payments

• Class 1 National Insurance: earnings of employees and office holders - damages