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Vaccine damages are paid as tax-free lump sums under the Vaccine Damages Act 1979. »Ê¹ÚÌåÓýappy are paid to people who are severely disabled as a result of vaccination against certain diseases. Once paid, it is up to the recipient (or whoever is acting on his or her behalf) what they do with the money: some may put it into a trust fund, others may invest the money in another way, for example to produce an annuity.

»Ê¹ÚÌåÓýapp beneficiary of the Vaccine Damage Payment is the child and as such it should be disregarded for tax credit purposes.

Where the child has grown up and makes a claim for tax credits in his or her own right, any continuing income from the vaccine damage trust must be declared as investment income.