Loss of earnings claim — how to claim lost income after an accident
Last updated · By Mustafa Bilgic
Lost earnings are a special damage
In a personal-injury claim, lost income is not part of the compensation for the injury itself — it is a special damage, meaning a measurable financial loss that you must prove with evidence. (For the wider picture, see general vs special damages.) A loss of earnings claim has two distinct parts: what you have already lost, and what you will lose in future.
Past loss of earnings
This covers the income lost from the date of the accident up to the date of settlement. It is calculated on your net pay — your take-home figure after tax and National Insurance — because that is the money you would actually have received. You can usually also include:
- Regular overtime, shift premiums and bonuses you would have earned;
- Commission or tips you can evidence from past records;
- Lost employer benefits such as pension contributions or a company car.
Employees prove this with payslips covering the period before and during the absence, plus a letter from the employer confirming time off and any pay withheld. GOV.UK sets out how Statutory Sick Pay works, which is relevant when your employer did not pay full wages.
Worked example — past loss of earnings
Suppose you normally take home £480 per week net and you were unable to work for 14 weeks after a car accident, during which your employer paid only Statutory Sick Pay. The past-loss calculation is the shortfall against your normal net wage:
| Item | Amount |
|---|---|
| Normal net weekly pay | £480 |
| Statutory Sick Pay received (per week) | £118 |
| Net weekly loss | £362 |
| Weeks unable to work | 14 |
| Past loss of earnings (£362 × 14) | £5,068 |
The Statutory Sick Pay figure used here is illustrative; the current weekly SSP rate is published on GOV.UK and should be used for any real calculation.
Self-employed loss of earnings
If you work for yourself there are no payslips, so the loss is shown through your business records. Helpful evidence includes:
- Annual accounts and self-assessment tax returns;
- SA302 tax calculations from HMRC;
- Invoices, contracts and bank statements;
- Records of work turned down or contracts lost because of the injury.
The loss is usually based on net profit over a representative period rather than turnover, and in larger cases an accountant's report may be used to establish the figure.
Future loss of earnings & earning capacity
Where the injury will affect your income after settlement, you can claim future loss. Two routes are used:
- Multiplier & multiplicand — for an ongoing, calculable loss. The annual net loss (the multiplicand) is multiplied by a figure (the multiplier) that reflects how many years the loss will continue. In England & Wales the multiplier is taken from the Ogden tables, the official actuarial tables that account for life expectancy and the discount rate.
- Smith v Manchester award — a lump sum given where the injury does not cause a precise ongoing loss but leaves you at a disadvantage on the open labour market (for example, you keep your current job but would struggle to find another if you lost it).
Sick pay, benefits and CRU recovery
How sick pay and benefits interact with your claim matters, because the law avoids paying you twice:
- Full sick pay from your employer means no lost income for that period — so nothing is claimed for it.
- Statutory Sick Pay only means you can claim the shortfall against your normal net wage (as in the example above).
- Certain state benefits paid because of the accident are recovered by the Department for Work and Pensions through the Compensation Recovery Unit (CRU). The paying insurer repays these to the DWP out of your settlement, so the same loss is not compensated twice.
Evidence checklist
- Payslips for the months before and during your absence.
- A letter from your employer confirming dates off and pay withheld.
- For the self-employed: accounts, tax returns, SA302s and invoices.
- Evidence of overtime, commission or bonuses you would have earned.
- Records of lost benefits (pension, company car, health cover).
- Details of any sick pay or benefits received because of the accident.
All of this is set out formally in the Schedule of Loss. For the bigger picture of how this fits the overall payout, see how compensation is calculated, and note the strict time limits — generally three years in England & Wales. Most injury claims are funded on a no win no fee basis. Free, impartial help is available from Citizens Advice.
Frequently asked questions
Can I claim loss of earnings after an accident?
Yes. If an accident that was not your fault stopped you working or reduced your income, lost earnings are recoverable as a special (financial) damage. You can claim past loss of earnings from the date of the accident to settlement, and future loss of earnings or loss of earning capacity where the injury affects your ability to work going forward. You must prove the loss with evidence such as payslips, an employer letter, or accounts if you are self-employed.
Is it gross or net pay?
Past loss of earnings is calculated on your net pay — your take-home income after tax and National Insurance — because that is what you actually lost. The claim reimburses the wages you would have received, not the gross figure before deductions. Regular overtime, shift premiums, commission and lost benefits such as a company car or pension contributions can also be included where they can be evidenced.
How do the self-employed prove lost earnings?
Self-employed claimants prove lost earnings with business records rather than payslips. Useful evidence includes annual accounts, self-assessment tax returns, SA302 tax calculations from HMRC, invoices, bank statements, and records of contracts or work turned down because of the injury. The loss is usually based on net profit over a representative period, and an accountant's report may be used in larger claims.
Can I claim future loss of earnings?
Yes, where the injury will reduce your income after settlement. Future loss is calculated using the multiplier and multiplicand method: the annual net loss (multiplicand) is multiplied by a figure (multiplier) reflecting how long the loss will last, taken from the Ogden tables in England & Wales. Where the injury simply puts you at a disadvantage on the open labour market, a lump-sum Smith v Manchester award may be made instead.
What about sick pay and benefits?
If your employer paid full sick pay you have not lost that income, so it is not claimed; if you received only Statutory Sick Pay you can usually claim the shortfall against your normal net wage. Certain state benefits paid because of the accident are recovered by the Department for Work and Pensions through the Compensation Recovery Unit, which the paying insurer repays out of the settlement, so you are not compensated twice for the same loss.