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Discount Rate Change to be Delayed?


MPs have called for the latest change in the personal injury Discount Rate to be delayed.

At a recent justice committee meeting, it was recommended that the government gather ‘unambiguous’ evidence about the way in which Claimants invest lump sum damages awards prior to any changes in legislation.

Personal Injury Discount Rate

The Discount Rate is applied when assessing the level of compensation a Claimant should receive by way of a lump sum. It is based on the levels of risk involved when a Claimant invests the damages award, and therefore how much they can make as a return. The lower the interest rate, the higher the level of lump sum compensation a Claimant will receive.

The proposed change relates to the rate being set at ‘low risk’, with some estimating this to be set between 0 and 1%.

It was announced in September that changes to the Discount Rate would go ahead. However, the proposals are yet to be approved by parliament.

In February 2017 the Discount Rate was changed from 2.5% to -0.75% by the then Lord Chancellor Liz Truss, without a consultation taking place, therefore causing some criticism. The MoJ was also criticised for failing to provide a financial impact statement based on the new Discount Rate.

Discount Rate Change

The ongoing speculation around the Discount Rate change draws divided opinion from both Claimant and Defendant camps in the market.

This latest announcement from the justice committee, recommending that evidence be gathered prior to parliament making a decision on the proposed Discount Rate change, will further delay matters. However, given the divided opinion following the rate change in February, the government will be hoping to decide on a system that is fair for all going forward.

Our team of forensic accountants assists in quantifying special damages in all types of PI and clinical negligence cases, in particular around complex loss of earnings, loss of pension and loss of dependency.

To discuss a case under no obligation call us on 0113 387 5670, email us at or fill out an Enquiry Form and we will contact you directly.