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HMRC internal manual

Insurance Policyholder Taxation Manual

Periodical payments: tax exemption: persons exempt

The persons entitled to the exemption to income tax on periodical payments made underan appropriate court order, agreement or Motor Insurers’ Bureau undertaking asdescribed in IPTM5020 are

  • the person entitled to the damages, that is the injured person
  • a person who receives a periodical payment on behalf of the injured person, for instance a guardian where the injured person is a minor, or a power of attorney where the injured person is incapacitated, and
  • a trustee who receives a periodical payment on trust for the benefit of the injured person. This is provided the trust is one under which the injured person is the only person who can benefit from the trust whilst he or she is alive. IPTM5070 describes the tax treatment of payments from such a trust to the injured person.
Further reference and feedback IPTM1013