Income Tax (Trading and Other Income) Act 2005 section 144

Purchased life annuity payments: carry forward of excess capital elements

Section 144 deals with the carry forward of unused capital elements from purchased life annuity payments that arose before 6 April 2005 under the old ICTA rules into the new ITTOIA 2005 regime.

• Applies to purchased life annuities where the old ICTA section 656(2) rules were in effect immediately before 6 April 2005
• Relevant where the total capital elements calculated under the old rules exceeded the total annuity payments actually received before that date
• The excess amount of capital element is carried forward and added to the fixed sum used to calculate the exempt portion under section 719(4)
• This carry-forward adjustment applies to the first annuity payment arising after 5 April 2005