SE13620 - Termination payments and benefits: Section 148 ICTA 1988: exemptions: payments on account of injury or disability: meaning of "disability": Statement of Practice 10/1981

Paragraph 3(b) Schedule 11 ICTA 1988 (Section 188(1)(a) ICTA 1988 for payments and benefits received before 6 April 1998)

“Disability” means the an incapacity to fulfil the duties of an office or employment caused either

• by a sudden affliction (such as a heart attack) or
• by the culmination of a process of deterioration of physical or mental health caused by a chronic illness (such as bronchitis)

but not by the normal processes of ageing.

If, for example, an employee has suffered a heart attack and returns to work, termination of employment at a later date may not be due to the disability. Only the situation at termination is relevant.

How this exemption operates was considered in Hasted v Horner (67 TC 439): see SE13630