What is an interim payment?

What is an interim payment?

An interim payment is part of your overall payment from your personal injury compensation amount, which you may be able to get in advance of receiving the total money. Interim payments are subject to eligibility and you have to make an application to receive one.

In order to be eligible for an interim payment during your claim, you have to be able to satisfy one of the following points:

• the person you claim against has indicated they are liable
• you have a judgment against the defendant for damages to be assessed
• the court considers that, if your case went to trial, you would win a substantial amount of compensation from the other party (or one or more parties where there are multiple parties)
• all parties have insurance to meet the claim
• the other party is a public body

How many interim payments can I have?

It is possible to make more than one application for an interim payment for your personal injury compensation claim. Providing you meet the criteria of an interim payment on each application and can show the correct evidence, you can apply for multiple interim payments. However, you need to make sure that you serve a copy of the application and evidence at least 14 days before the hearing.

How much can an interim payment for a personal injury be?

When a court grants an interim payment for your personal injury compensation, they follow a rule known as the ‘reasonable proportion' rule. This means that the amount of the interim payment has to be a reasonable proportion of what your total amount of compensation is likely to be.  However, there is no limit to the amount of payment you can request as long as the total does not exceed the ‘reasonable proportion' rule. Your legal team will be able to help you understand what this may be for your case.

If I get an interim payment, does that affect my compensation award?

If your application for an interim payment is successful, the total amount of compensation you receive for your personal injury claim is not affected. However, the interim payment is an early payment deducted from your total award. The compensation you ultimately receive at the end of your claim will be the remaining amount of your total figure after the interim payment.

In short, the interim payment is part of the final compensation payout but is given to you in advance.

Do I have to pay tax on interim payments?

You do not have to pay any tax on your interim payment or any of your compensation settlements. This is because all personal injury compensation settlements are not taxable.

Compensation payouts are made up of two parts. Although the settlements are tax-free, part of your payment will be made up of interest to compensate for the time it has taken for your case to settle which is taxable:

• Compensation settlement is to cover all losses and damages for the injury.
• Interest is then accumulated from the time of the accident until the case is settled.

But don't worry, the interest amount will have tax deducted before you receive the total payment, and that tax is paid by the other party.

How to request an interim payment

To request an interim payment during a personal injury claim, first consult with your legal team on whether you could warrant an interim payment. They'll then help you gather necessary evidence of your immediate financial need, such as medical bills and loss of income.

Once evidence is collated, your solicitor or legal team may then formally request the interim payment directly from the defendant or their insurance company. If the other side refuses, you and your legal team can then apply to the court. Applying to the court involves filing an application that includes evidential documentation of your financial needs, an assessment of the strength of your overall personal injury claim, and justification/reasoning for the interim payment. The judge will then review the application, consider the evidence and decide whether to grant the payment, ordering the defendant to pay a specified amount if approved.

How long does it take to get an interim payment?

There is no set timeframe for receiving an interim payment for a personal injury compensation payment. However, once the court order is granted, the payment usually reaches the claimant between three to six weeks later.