Income Tax (Earnings and Pensions) Act 2003 section 609

Annuities for the benefit of dependants

Section 609 sets out the tax treatment of annuities purchased with contributions made to secure income for a worker's dependants after their death, treating such annuities as taxable pension income.

• Annuities purchased with contributions that qualified for tax relief under the old rules (tax year 2012-13 and earlier) or that meet the updated conditions from 2013-14 onwards are treated as taxable pension income.
• Where an annuity arises from a source outside the United Kingdom, it only falls within these rules if it is paid to a person who is resident in the United Kingdom.
• From 2013-14, qualifying contributions must be paid by or deducted from an individual's earnings under statute or their employment terms, and must be for the purpose of securing a deferred annuity for a surviving spouse or civil partner, or providing for the individual's children after death.
• National Insurance contributions paid under the Social Security Contributions and Benefits Act 1992 (or the Northern Ireland equivalent) are specifically excluded from the scope of qualifying contributions.