Periodical payments: tax exemption: payments made under an order, agreement or undertaking which is later varied
From 1 April 2005, courts have the power to include terms in an orderthat allow for it to be varied at some time in the future in specified circumstances.These might be, for instance, if there is a chance that the injured personscondition will significantly improve or deteriorate in future. The court would be able tovary the order on its own initiative or following application by a party or with theagreement of all the parties.
Although less common, agreements settling a claim or action for damages for personalinjury and undertakings from the Motor Insurers Bureau might also be varied at alater date.
Where periodical payments arise from a variation of the original order, agreement or MotorInsurers Bureau undertaking, from 1 April 2005 those payments will also be exemptfrom income tax, in the same way that periodical payments under the original order,agreement or undertaking are exempt from tax.
|Further reference and feedback||IPTM1013|