Income Tax (Trading and Other Income) Act 2005 section 718

Excluded annuities

Section 718 identifies certain types of purchased life annuities that are excluded from the partial tax exemption otherwise available under section 717.

• The capital element exemption for purchased life annuity payments does not apply to annuities bought wholly or partly with premiums that qualified for life assurance premium relief under the old section 266 of ICTA 1988.
• Annuities purchased in accordance with a direction contained in a will are also excluded from the exemption.
• Annuities purchased to fund an annuity payable under a will or settlement, out of income from property disposed of by that will or settlement, are likewise excluded.
• For the third category, it makes no difference whether capital could also be used to pay the annuity — the exclusion still applies.