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 the injured party.

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

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