Expert Witness Journal Issue 67 June/July 2026 - Flipbook - Page 38
calculated when valuing their claim. However, when
looking to the future, the valuation of any child’s
future loss is based on experts’ estimates of their
longevity, future needs and care costs. Following
settlement, and throughout their life, the injured
person’s health, care needs or circumstances
may change or the costs of professional care may
increase unexpectedly. Multiple uncertainties at the
point where traditional lump sum compensation for
future loss is calculated mean that some claimants
live longer than expected, with a risk that they
run out of money for care whilst still alive. Sadly,
others leave money unspent after their death,
either because their life was shorter than predicted,
or because they or their families held back from
spending money on an appropriate level of care out
of fear that their compensation fund might run out.
•
PPO payments are index-linked to protect
them from the impact of in昀氀ation over time,
so the payments increase along with costs of
professional care.
•
Compensation which is paid as income via a PPO
is treated as capital by HMRC, which means that
the annual income payments are tax free.
What are the disadvantages of
periodical payment orders (PPO)
in compensation claims?
Despite the long-term bene昀椀ts of PPOs there are
reasons why a PPO might not be appropriate in
every case.
•
We use periodical payment orders (PPOs) to
overcome these problems by guaranteeing that
money to pay for care will be available throughout
the claimant’s life. In addition to the regular annual
income that a PPO provides, ‘stepped PPOs’ can
schedule increases in the payments at pre-set future
dates to cater for predicted increases in the need for
care.
Additional PPOs can also be set to start or 昀椀nish
at speci昀椀ed times in the claimant’s life, such as to
pay for special needs educational school placements
during the child’s teenage years. The claimant is
guaranteed to receive the income provided by a
PPO to pay for their care throughout their life,
even if they far outlive their predicted lifespan. PPO
payments cease on the day the claimant dies.
In practice, we help most of our clients overcome
this problem by structuring the 昀椀nal settlement
to combine PPOs for care with a lump sum to
cover one-o昀昀 purchases and provide 昀氀exibility
for unexpected contingencies.
•
Where the case is settled on a discounted
(proportionately reduced) basis to protect
the claimant from a signi昀椀cant risk of losing
their case, depending on the level of the
compensation that the claimant receives, a PPO
might not make the best use of the claimant’s
昀椀nal compensation in meeting their priority
needs.
•
If the injured claimant’s life expectancy is
signi昀椀cantly shortened, they may get better
value from having their compensation paid fully
as a lump sum which they can use immediately
for priority needs, such as an adapted home,
rather than as annual income from a PPO which
will end on the date of their death.
What are the advantages of
periodical payment orders (PPO)
in compensation claims?
PPOs provide several advantages for a claimant with
severe lifelong disability, if included as part of their
compensation settlement:
•
PPO payments are guaranteed to continue for
the remainder of the claimant’s life, even if they
outlive their predicted lifespan. The claimant
can use the money from their PPO to pay for
their care, knowing that it will not run out.
•
PPO payments are calculated based on the
injured claimant’s individual needs, ensuring
that they get the level of care that is right for
their disability.
•
PPO payments can be scheduled to increase or
boost the claimant’s income at speci昀椀ed times
in their life, such as when their need for care
and support is expected to increase owing to
changes in life-stage, circumstances or level of
disability.
EXPERT WITNESS JOURNAL
The major disadvantage of having compensation
paid via a PPO is that it limits the claimant’s
昀氀exibility as to how their money is spent. In order
to fully compensate someone who has su昀昀ered
severe, lifelong disability, such as cerebral palsy
or neurodevelopmental disability, caused by
medical negligence, a lump sum may be needed
to pay for larger essential purchases, such as
a more suitable or adapted house which can
accommodate professional carers or a specialist
vehicle.
We work closely with our experts and independent
昀椀nancial advisors to ensure that each of our clients
receives expert advice on the most favourable format
for their compensation settlement, based on their
individual circumstances.
Who decides if a compensation settlement
is paid as a lump sum or a PPO?
The courts can order PPOs but in practice in medical
negligence claims it is more common for them to
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JUNE 2026
