Part 4

Savings and investment income
Chapter 7

Purchased life annuity payments

Charge to tax on purchased life annuity payments
422
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).

Meaning of “purchased life annuity”
423
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.

Income charged
424
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).

Person liable
425
The person liable for any tax charged under this Chapter is the person receiving or entitled to the annuity payments.

Annuity payments received after deduction of tax
426
In accordance with section 848 of ITA 2007 a sum representing income tax deducted under section 901 of that Act from an annuity payment within this Chapter is treated as income tax paid by the recipient . . . .
Words in s. 426 substituted (6.4.2007 with effect as stated in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 523(2) (with transitional provisions and savings in Sch. 2)
Words in s. 426 repealed (6.4.2007 with effect as stated in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1031, 1034, Sch. 1 para. 523(3), Sch. 3 Pt. 1 (with transitional provisions and savings in Sch. 2)