Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
When an accident stops you working, the financial hit can be as unsettling as the injury itself. Rent, bills and food shopping do not pause while you recover, and the gap between what you would have earned and what actually lands in your account can grow quickly.
The good news is that lost income forms one of the most important heads of damages in a personal injury claim, covering both what you have already lost and what you are likely to lose in the future. This guide walks through how loss of earnings is worked out in England and Wales, why the figure is rarely as simple as multiplying your daily rate by days off, and what evidence helps support a stronger claim. It is written for people trying to make sense of the process without the legal jargon.
Overview
A loss of earnings claim is the part of a personal injury settlement that compensates you for income you could not earn because of the injury. It sits within what lawyers call 'special damages', meaning financial losses that can be calculated with reference to real figures, as opposed to 'general damages' which cover the pain and suffering element.
The claim has two components. Past loss of earnings covers the period from the accident up to the date your case settles or reaches trial. Future loss of earnings covers income you are expected to lose going forward, for example if you cannot return to the same role, need reduced hours, or face a shortened working life.
Future losses are typically worked out using multipliers published in the Ogden Tables, which adjust lump sum awards to reflect life expectancy and investment returns. The aim of the law is to put you, so far as money can, back in the position you would have been in had the injury never happened.
That principle sounds simple but the arithmetic behind it can get technical, particularly for the self-employed, those on variable pay, or anyone whose career path has been genuinely altered by the injury.
Key steps
Gather your income evidence. Collect payslips for at least the three months before the accident, plus any P60s and recent tax returns. If you receive bonuses, commission, overtime or shift allowances, pull together enough history to show a realistic average. Self-employed claimants should prepare accounts, invoices and SA302 tax calculations covering two to three years. 2. Record every day you have missed. Keep a simple log of absences linked to the injury, including medical appointments, physio sessions and days you tried to work but could not manage. Ask your employer for a letter confirming your absence dates, your contracted hours, your usual rate and any sick pay policy that applied during your time off. 3. Work out your net loss, not gross. Compensation is based on take-home pay after tax and National Insurance, because receiving gross figures would leave you better off than if the accident had never happened. Deduct any Statutory Sick Pay, contractual sick pay or state benefits you received during the absence, as these reduce the actual loss you experienced. 4. Consider future loss and career impact. If medical evidence suggests you cannot return to your previous role, or will face reduced capacity, future loss needs careful calculation. This may involve expert reports on your long-term prognosis, employment consultants commenting on your earning potential, and use of Ogden multipliers to produce a fair lump sum figure. 5. Submit the schedule of loss. Your losses are presented to the defendant's insurer in a document called a Schedule of Loss, itemising each element with supporting evidence. The other side will usually respond with a Counter-Schedule, and negotiation follows. If agreement cannot be reached, the court will decide the figures at trial.
Q Can I claim for loss of earnings if I was self-employed?
Yes. Self-employed claimants can recover lost profits caused by the injury, though the calculation is usually more involved. You will typically need to provide two or three years of accounts, tax returns and invoices to show a pattern of earnings. If your income varies seasonally or by project, an accountant's report may be needed to produce a credible figure for the period you could not work.
Q Do I have to pay back Statutory Sick Pay I received?
SSP is treated as income you actually received, so it reduces your claimable loss rather than being repaid directly. However, certain state benefits paid while you were off work may need to be reimbursed to the Department for Work and Pensions under the Compensation Recovery Unit scheme, and the defendant's insurer usually handles that deduction before paying your settlement.
Q What if my employer only paid me half my normal wage?
You can claim the shortfall between your contractual sick pay and your usual net earnings. Many employers offer full pay for a set period and then reduce to half pay or SSP only. The reduction is a real financial loss flowing from the injury, so it forms part of your claim. Keep copies of your sick pay policy and payslips showing the drop.
Q Can I claim for missed overtime or bonuses?
Yes, if you can show the extra income was a reasonably reliable part of your earnings. Evidence might include a pattern of overtime in previous months, contractual bonus schemes, or commission statements showing consistent performance. Purely speculative amounts are harder to recover, but regular additions to basic pay are usually accepted where the history supports the figure.
Q How is future loss of earnings calculated?
Future loss is usually worked out by taking your annual net loss (the multiplicand) and applying a multiplier drawn from the Ogden Tables, which account for life expectancy and a discount rate set by the Lord Chancellor. Adjustments are often made for contingencies such as the chance of unemployment or career changes you might have made regardless of the injury.
Q How long do I have to bring a personal injury claim?
The general limitation period in England and Wales is three years from the date of the accident or from the date you first knew the injury was significant and linked to someone else's fault. Different rules apply to children and to those lacking mental capacity. Missing the deadline usually ends the claim, so acting well before the three year point is sensible.
Q Will my compensation be taxed?
Personal injury compensation, including the loss of earnings element, is generally not subject to income tax or capital gains tax in the UK. This is why claims are calculated on a net basis: awarding gross figures would give you more than you actually lost. Interest on delayed payment of damages may be treated differently, so take advice if a substantial interest element is involved.
Unsure how your lost earnings should be calculated?
Working out what you can actually claim for missed wages, sick pay deductions and future losses can feel confusing when you are already dealing with the injury itself. An experienced legal adviser can talk you through how the numbers usually come together based on what you describe on the call.
✓A plain-English walkthrough of how loss of earnings is calculated
✓Practical perspective on sick pay, benefits and net versus gross figures
✓What to watch out for when gathering evidence in your specific situation
✓Clarity on whether future loss may apply based on what you describe
Personal call · For information only · Independent advisers
Written & reviewed by
Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.
