The Discount Rate is the figure which is ordinarily used when calculating lump sum compensation payments for future losses in high value personal injury claims.  It is designed to reflect the rate of return to be expected upon investment of the compensation awarded and is calculated using a rate aimed to put the claimant in the same financial position as if they had not been injured.

The decision to dramatically reduce the Isle of Man discount rate follows a review of the UK Ministry of Justice’s consultation into the methodology on which the old rate was based[2] and advice from the UK Government Actuary Department in relation to factors specific to the Isle of Man.

The discount rate was last set by Treasury in 2014.  It was challenged in the High Court[3] in 2017 on the basis that the rate of 2.5% was said to no longer reflect the rate of return which might be achieved upon investment of a lump sum award.  However, the challenge failed with the Court confirming that the rate set by Treasury would be upheld by the Courts and only departed from in exceptional cases where the specific facts of the case meant that a different rate would be more appropriate, until such time that it was amended by Treasury.  The case in question was not considered exceptional.

The new discount rate of -0.25% came in to operation on 17 June 2020, following approval of The Damages (Personal Injury) (Assumed Rate of Return) Order 2020 by Tynwald on 16 June 2020 and will apply to all future awards which compensate for future loss.

The reduction will substantially increase the sums which may be awarded in high value cases involving a significant degree of future losses.

A copy of The Damages (Personal Injury) (Assumed Rate of Return) Order 2020 can be found here.


[1] The Damages (Personal Injury) (Assumed Rate of Return) Order 2020
[2] https://www.gov.uk/government/consultations/setting-the-personal-injury-discount-rate-government-actuarys-advice-to-the-lord-chancellor
[3] De Yoxall v Moore [4 August 2015] ORD 2009/17 (Unreported)
Type

Insight

Locations

Isle of Man

Key contacts

Ruth Costain

Associate: Isle of Man

T +44 (0) 1624 647 988
E Email Ruth

Claire Corkish

Counsel: Isle of Man

T +44 (0)1624 647 951
E Email Claire

Share
Twitter LinkedIn Email Save as PDF
More Publications
30 Jul 2021 |

Fighting international fraud

First published in New Law Journal, July 2021. Appleby partners Anthony William and Jared Dann an...

Contributors: Jared Dann, Claire Corkish
28 Jul 2021 |

Trust Protectors and the Exercise of Trustee Powers

The recent judgment of the Staff of Government Division in the case of Mazzoleni v Summerhill Trust ...

Contributors: Erin Trimble-Cregeen
18 Jun 2021 |

Isle of Man – Extension of Economic Substance Requirements to Partnerships and Limited Liability Companies

The Income Tax (Substance Requirements) Order 2021 was approved by Tynwald on 16 June 2021.  This O...

12 Mar 2021 |

Material adverse change clauses in light of the Covid-19 pandemic

Experts from each of our key global offices provide jurisdiction specific advice and answer question...

8 Mar 2021 |

Appleby Celebrates International Women’s Day

International Women’s Day is celebrated annually in support of gender equality and equal participa...

8 Dec 2020 |

The International Comparative Legal Guide to Gambling 2021 – Isle of Man Chapter

This chapter was first published in The International Comparative Legal Guide to: Gambling 2021, by ...

Contributors: Sophie Corkish
30 Oct 2020 |

When Worlds Collide – How COVID is Connecting Technology with Natural Resources

Dating back to the beginning of 2020, the natural resources sector has been extremely active at both...

Contributors: Peter Colegate