Structured Settlements in the United Kingdom

England and Wales, Scotland, Northern Ireland

The Acts covering the award of structured settlements in the United Kingdom are the Damages Act 1996 and the Income and Corporation Taxes Act 1988. Section 3 does not extend to Scotland (see below); otherwise the Damages Act 1996 applies to the whole of the United Kingdom. Tax advantages are granted on that part of the settlement which is to be paid in instalments.

Annuitants are protected against liquidation of the insurer by the provisions of the Policyholders Protection Act 1975 (Sections 10 and 11) to the full amount of the liability, benefit or value of the annuity - Damages Act 1996, Section 4 - (1).

A court may only make an order for a structured settlement to form all or part of the damages awarded "with the consent of the parties" - Section 2 - (1). This has, on occasion, led to courts being unable to award a structured settlement because the defendant (in these circumstances, usually an insurance company) has not agreed to it. Because of this, it has been suggested that the power of the courts should be extended to enable structured settlements to be imposed.

Section 3 deals with what happens if someone who has been awarded provisional damages and then dies as a result of their injuries. In this case actions may be brought under the Fatal Accidents Act 1976, or in Northern Ireland under the Fatal Accidents (Northern Ireland) Order 1977. Any compensation so awarded must take account of loss of support to dependents.

Section 6 of the Damages Act deals with those who receive their structured settlement payments from a Government department instead of from an insurance company.

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