Horizon IT System: Compensation
The question
To ask the Secretary of State for Business and Trade, which Horizon Shortfall Scheme payments are 1) exempt from tax and 2) subject to tax, and whether these taxation rules apply to all historical payments already paid out.
Answered by Blair McDougall
The Horizon Shortfall Scheme (HSS) is designed to put postmasters back into the position they would have been in ‘but for’ Horizon, and no one will pay more tax than at the time of the shortfalls. All fully assessed HSS awards are paid gross and taxable in the year in which redress is paid, unlike other schemes where awards are paid after tax deductions. To avoid claimants being unduly affected, HSS provides a tax top-up, so redress is not reduced. Postmasters also receive £1,200 for independent tax advice and help with tax returns. Payments related to the fixed-sum option on HSS, and associated top-ups, are tax exempt.
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