No, tax is not payable out of any personal injury settlement that you receive. This is because the lawyers, insurers and judges only take into consideration net losses. That is, they will look at your net earnings (i.e. gross earnings less tax) in order to calculate what your compensation for past economic loss should be and what you should be compensated for your future loss of earning capacity.
Of course, if you then invest those funds received from any personal injury claim and earn income or interest from that investment, you may well need to pay tax on that income or interest.
