The Lord Chancellor has reviewed the Court Funds Office rates of interest following the drop in the Bank of England base rate. The special account rate has now been reduced from 0.5% to 0.1%, and the basic account rate from 0.1% to 0.05%.
On 19 March 2020 the Bank of England reduced the base rate to 0.1% as a result of the financial impact of Covid-19. On 7 May 2020, it was announced the 0.1% base rate would be maintained until further notice.
Following these announcements, the Lord Chancellor has directed that both the special account rate and the basic account rate will be reduced from 1 June to 0.1% and 0.05% respectively. This decision ensures the running costs of the Court Funds Office Service will continue to be met and that clients can continue to receive interest. The rates will be reviewed again should the Bank of England base rate rise.
As interest on general damages remains at 2% from issue, defendants should ensure that interim payments are taken as on account of general damages first.
The rate on which interest for special damages is awarded on losses continuing to trial is half the special account rate. The available special account rate prior to 1 June 2020 was already at a low level, and therefore we expect that claimant representatives will seek permission for damages payments to be paid into accounts carrying higher interest rates.