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Income Tax (Earnings and Pensions) Act 2003

Section 611: Annuities in recognition of another’s services

2436.This section applies to an annuity purchased by any person in recognition of another’s services. It derives in part from section 18(1)(a)(i) of ICTA and in part is new.

2437.Subsection (1) is new. It identifies the annuities to be taxed as pension income.

2438.Subsection (2) derives from section 18(1)(a)(i) of ICTA. It limits the scope of the section if the annuity is a foreign annuity. Foreign annuities are taxable only if they are paid to persons resident in the United Kingdom.

2439.Subsection (3) ensures there is no overlap with other sections in the pension income Part. An annuity paid by an approved retirement benefits scheme may be purchased in recognition of another’s services. In ICTA an annuity paid by an approved retirement benefits scheme is taxed under Schedule E. The annuities identified in this section are taxed under Schedule D. A Schedule E charge takes priority over a Schedule D charge. This subsection preserves that order of priority.

2440.Subsection (4) gives the meaning of “office”. It applies section 5 in Part 2 (Employment Income: charge to tax).

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