The issue of Interest on damages in personal injury matters, where the law of England and Wales applies, is often overlooked and calculations are often wrong. The complexities arise from the fact that different rates and different periods apply.

First and foremost, the award of interest is at the court’s discretion.

What are general damages?

General damages are designed and awarded to compensate for the pain and suffering endured as a result of an accident, including physical or psychological  symptoms, as well as loss of amenity, such as loss of enjoyment in life or lowered quality of life.  

Interest on general damages

General damages include compensation for the pain, suffering and loss of amenity. A claimant is entitled to the simple rate of interest, and it is well established, on the basis of case law that this is awarded at a rate of 2% per annum from the date of service of the claim form until the date of trial or settlement. 

What are special damages?

Special damages may be awarded to claimants to compensate for actual out-of-pocket expenses and financial losses incurred as a direct result of defendant’s actions or negligence, such as loss of earnings, transport expenses, medical treatment etc... Special damages may cover past and future losses, if any.

Interest on special damages

Special damages compensate for financial losses suffered as a consequence of the accident and the objective is to put the claimant in the financial position he/she would have been, but for the accident. As a claimant should not benefit financially from special damages, the applicable rate on special damages is lower than for general damages.

The rate applicable is the one payable on the court special account and  further to a review in March 2025, the rate of interest payable is set at 4.50%. This would apply to medical expenses or medical treatment required after the accident for example.

Where the loss/es continue(s) to accrue from the date of accident until the date of trial, half of the appropriate rate will be applied, so 2.25%. This could be the case for ongoing loss of earnings or care and assistance.

For personal injury matters where foreign law applies, different rules may apply.