Income Tax (Trading and Other Income) Act 2005

Chapter 7 Purchased life annuity payments

422 Charge to tax on purchased life annuity payments

(1) Income tax is charged on annuity payments made under a purchased life annuity.

(2) For exemptions, see in particular—

(a) section 717 (exemption for part of purchased life annuity payments),

(b) section 725 (annual payments under immediate needs annuities),

(c) section 731 (periodical payments of personal injury damages), and

(d) section 732 (compensation awards).

423 Meaning of “purchased life annuity”

(1) In this Chapter “purchased life annuity” means an annuity—

(a) granted for consideration in money or money’s worth in the ordinary course of a business of granting annuities on human life, and

(b) payable for a term ending at a time ascertainable only by reference to the end of a human life.

(2) For this purpose it does not matter that the annuity may in some circumstances end before or after the life.

424 Income charged

(1) Tax is charged under this Chapter on the full amount of the annuity payments arising in the tax year.

(2) Subsection (1) is subject to Part 8 (foreign income: special rules).

425 Person liable

The person liable for any tax charged under this Chapter is the person receiving or entitled to the annuity payments.

426 Annuity payments received after deduction of tax

Income tax deducted under either of the following sections from an annuity payment within this Chapter is treated as income tax paid by the recipient—

• section 348(1)(b) of ICTA (under which income tax may be deducted from some payments by the payer), and

• section 349(1)(a) of that Act (under which income tax must be deducted from some payments by the payer).