Postmasters receiving compensation payments from the Post Office Process Review scheme and the Suspension Remuneration Review scheme will be exempted from Income Tax, National Insurance Contributions and Capital Gains Tax. 

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Previous measures in 2023 exempted compensation payments under the Group Litigation Order (GLO) scheme from Income Tax, National Insurance Contributions, Capital Gains Tax and provided relief from Inheritance Tax (IHT). The new measure aligns the tax treatment of payments under a number of related compensation schemes.

This legislation was originally announced in Autumn Statement 2023. It follows legislation in relation to corporate recipients included in Finance Act 2024. These provisions provided that the ultimate recipient of compensation should be taxed in a similar way as an individual who received the compensation directly.

The three schemes provide for compensation as follows:

  • The Post Office Process Review scheme compensates postmasters who were financially impacted as a result of operational issues unrelated to Horizon shortfalls such as processes or policies connected with certain Post Office Limited services.
  • The Suspension Remuneration Review scheme includes top-up payments which compensate postmasters who did not receive the suspension pay they were entitled to.
  • The GLO scheme is an ex-gratia scheme set up and run by the Department for Business and Trade. The new measure will also exempt a small subset of compensation payments under this scheme. This scheme compensates those who litigated successfully but whose damages were reduced by legal fees. GLO payments are made to nominated individuals where entities that would be eligible to compensation have been dissolved. The new measure exempts payments to a nominated individual (a shareholder or director of a company or partner in a partnership) who receives this compensation directly.

Useful guides on this topic

Post Office Horizon Compensation & Tax
As part of the fallout of the Post Office Horizon scandal, many sub-postmasters and sub-postmistresses are receiving compensation. How are these receipts taxed?

Horizon scandal: tax filing issues
For over twenty years more than 700 sub-postmasters were wrongly prosecuted for fraud by the Post Office. In January 2024 the Government announced a 'mass exoneration' to clear their criminal convictions and agreeing to make an upfront payment of £75,000 in extra compensation.

Tax Data Card 2024-25
A summary of key tax rates and allowances for 2024-25 and 2023-24.

External links

The Post Office compensation schemes - postmaster exemptions

SI 2023/184 The Post Office Horizon Compensation and Infected Blood Interim Compensation Payment Schemes (Tax Exemptions and Relief) Regulations 2023

SI 2023/186 The Social Security (Contributions) (Amendment) Regulations 2023

Government announces tax top-up payments for postmasters affected by the Horizon IT scandal

SI 2023/772 The Post Office Horizon Shortfall Scheme Top-Up Payments (Tax Exemptions) Regulations 2023

SI 2023/773 The Social Security (Contributions) (Amendment No. 5) Regulations 2023

Inheritance Tax Manual: IHTM10283 Post Office Horizon Compensation SchemesInheritance Tax Manual: IHTM10283 Post Office Horizon Compensation Schemes

Post Office Compensation Update: Statement made on 29 June 2023 (Inheritance Tax)

SI 2023/1009 The Post Office Horizon Shortfall Scheme and Group Litigation Order Compensation Payments (Inheritance Tax Relief) Regulations 2023