Personal Injury Discount Rate: Exploring the option of a dual/multiple rate

Published: 19/01/2023 | News

The MOJ have just opened a consultation on the Personal Injury Discount Rate (PIDR) that, as personal injury practitioners, we all know is of such importance when advising our clients about future losses. In recent times we have had +2.5%, -0.75% and the current rate of -0.25% that apply to all future heads of loss where a multiplier is relevant. The consultation is about varying the discount rate across duration of loss and heads of damages.

By way of background, the PIDR is a calculation which adjusts the amount of damages for future loss received by an individual who is wrongfully injured, to ensure that it reflects the interest they can expect to earn by investing such payment, as well as the effects of tax, expenses and inflation.  The PIDR is prescribed by the Lord Chancellor in England and Wales under the terms of the Damages Act 1996.

The PIDR has been a single rate, with three reviews since the 1996 Act.  Prior to the Civil Liability Act 2018, the PIDR was set in accordance with the principles established in the House of Lords decision of Wells v Wells [1999] 1 AC 345.  However, there were concerns that this methodology could lead to over-compensating the individual.  Part 2 of the 2018 Act reformed the methodology to create what was thought to be a fairer and more accurate way to set the discount rate, taking into account of a range of factors.  The then Lord Chancellor reviewed and set the first rate using the new methodology at -0.25% in July 2019.

This Call for Evidence examines the issues relating to the introduction and use of a dual and/or multiple PIDR.  It explores a variety of issues including whether different rates could be set for ‘heads of loss’ or by ‘duration of injury’ and considers several alternative dual/multiple rate models implemented in other jurisdictions.

The Call for Evidence will last for 12 weeks and will close on 11 April 2023.  A response will be prepared and published by July 2023.

In the meantime, how personal injury practitioners will advise their clients to take best tactical advantage of potential changes that this consultation may give rise to in the PIDR will have to be seen. Certainly, if the thought is that the PIDR will be less generous in certain circumstances we will see a flurry of settlements, or if more generous a holding-off and putting back of joint settlement meetings. Farrar’s Building will be hosting a webinar on the tactical play on a date to be announced.


Full information about the consultation can be found at: