HL Deb 23 February 2004 vol 658 c9WA
Baroness Finlay of Llandaff

asked Her Majesty's Government:

Why the compensation to some thalidomide victims is not tax exempt; and whether this is in line with other personal injury payments. [HL1238]

Lord Davies of Oldham

Payments to thalidomide victims are made from the Thalidomide Trust, which was set up in 1973 under the agreement with Distillers (the manufacturers of the drug). Income payments from this trust are taxable on the beneficiaries under the normal trust income tax rules.

Payments following a settlement of a claim or action for damages for personal injury can be made in a number of ways, some where the payments are taxable in the hands of the recipient and some where they are not. For instance, it is possible for regular payments made under a structured settlement to be exempt from tax under legislation introduced in 1996, provided the settlement meets the conditions of that legislation.