Calculating the compensation part of a lump sum payment 117-02010010

Has advice of Lump Sum Payments (SS446) and settlement documents been received?

• Yes, go to Step 3
• No:
• for Settlements made out of court or by consent judgement, go to Step 2
• for Payments made by judgements or arbitrators in contested hearings, go to Step 4

Request the documents from the compensation payer.

Procedure ends here.

A copy of the settlement details may come from the:

• compensation payer
• customer's solicitor

To calculate part of the lump sum. Add the following amounts:

• the lump sum amount, plus
• medical costs
• legal costs (if known at the time of settlement)
• any previous lump sums
• any indemnity provided by the compensation payer less
• amount paid for lost earnings then
• Apply the 50% rule to the lump sum amount

For state specific examples, see Resources page of Calculating a compensation debt for out of court settlements.

The economic loss component is used to calculate the preclusion period and any social security charge. See Calculating a compensation debt for out of court settlements.

Procedure ends here.

A copy of the judgement or arbitration papers must come from the:

• compensation payer
• customer's solicitor

Use the amounts awarded for economic loss as specified in the judgement to calculate the preclusion period and charge.

Note: if the court order does not fully set out the basis of the award, more information should be sought from the compensation payer. If no information is available, it is reasonable to apply the 50% rule.