Annex 1: Minor changes in the law made by the Act: Change 125: Exempt income: interest on damages for personal injury: awards by foreign courts: section 751(1)
This change gives statutory effect to ESC A30 (interest on damages for personal injuries (foreign court awards)).
Section 329(1) of ICTA exempts interest on damages for personal injury from income tax by reference to judgements given by virtue of the statutory provisions specified in section 329(2) of ICTA. These are provisions that have effect in the various parts of the United Kingdom.
However, ESC A30 provides that the exemption under section 329 of ICTA is extended to interest on damages awarded in corresponding circumstances by a foreign court if the interest is exempt from tax in the country in which the award is made.
Section 751(1)(c) gives effect to the concession.
This change is in taxpayers’ favour in principle. But it is expected to have no practical effect as it is in line with current practice.