IPTM1140 | Fundamental concepts: what is a structured settlement?

Large damages in personal injury cases are increasingly being paid as an annuity,series of annuities or other series of recurrent payments, usually for the life of theinjured party.

Sometimes the payments will be made directly by the responsible body, or defendant, forexample a health authority, though commonly the defendant’s general insurer will beliable. The general insurer, for instance a motor insurer, will often buy an annuity froma life insurance company to meet its liabilities under the claim.

ITTOIA05/S731 onwards deals with the tax implications of structuredsettlements, but does not use or define the term.

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