Important update: The Lord Chancellor has changed the discount to MINUS 0.75%

You did not read that incorrectly. The discount rate has moved by a huge 3.25% downwards to -0.75%, writes Matthew White of our personal injury team. It has not moved down by 0.75% (to 1.75%, which many would probably not have been surprised by), rather it has dropped to -0.75%.

The practical effect of that is that rather than awards of damage being discounted for accelerated receipt, they will now be uplifted for accelerated receipt.

By way of example, a 40-year old man losing £20,000/ year until retirement age 65 (25 years) would previously have used an unadjusted working life multiplier of 18.09 (loss £361,800). Now his multiplier will be about 26.5! His loss will be c.£530,000, a difference of £168,200 (or about 46% extra on those facts). That is in a relatively simple example (and reduction factors will make a difference), but imagine that multiplied across the field of personal injury cases, the impact will be vast.

Perhaps periodical payments will become more attractive to insurers.

Read more: 

• The Lord Chancellor’s announcement
• Further worked examples of what the new -0.75% discount rate might mean in practice for a variety of common scenarios
• The Lord Chancellor’s statement of reasons

View profile: Matthew White

To instruct Matthew on a related matter please contact his clerks: [email protected] or 0117 923 4730.