Income Tax (Trading and Other Income) Act 2005 section 424

Income charged

Section 424 establishes how annuity payments are charged to income tax, specifying that tax applies to the full amount arising in the tax year.

• Tax is charged on the full amount of annuity payments arising in the tax year, with no deductions allowed
• Annuity payments are treated as pure income profit in the hands of the recipient
• The charge may be reduced where the exemption for part of purchased life annuity payments applies
• Special rules in Part 8 of the Act may modify the charge where the annuity arises from a source outside the United Kingdom