No liability to income tax arises for persons (defined below) in receipt of periodical payments where the payments are made (ITTOIA 2005, s. 731(2)):

1under an order of the court, in reliance on the Damages Act 1996, s. 2 (including an order as varied);

2under an order of a court outside the UK which is similar to an order under s. 2 (including an order as varied);

3under an agreement, so far as it settles a claim or action for damages in respect of personal injury (including an agreements as varied);

4under an agreement, so far as it relates to making payments on account of damages that may be awarded in such a claim or action (including an agreement as varied);

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