Life Assurance - Today there are seven basic types - tax points

Tax credits - One thing in favour of annuities is the sympathetic treatment they get from the Inland Revenue. (see http://www.hmrc.gov.uk/TAXCREDITS/)

Although the company has to deduct income tax from each annuity payment, the Income Tax and Corporation Taxes Act 2014 laid down that when the person with the annuity (the annuitant as he or she is called) has paid for the annuity himself, tax is only deducted from the interest accruing on the capital invested in the annuity, and not the capital element itself.

This cuts out any annuity which comes by way of a will or any other settlement, one which is a reward for services in employment, or through a pension or superannuation scheme. The Inland Revenue has also set up certain limits where no tax at all is deductable. For single people this is a total income, which is not more than £41,540 for married couples, the figure is a combined income of £2,455.

These are the levels for the over-65s (in the case of a married couple only one of them need be over-65). Under 65 the income levels are £6,165 (single) and £6,815 (married).

At the same time there is a further concession that in calculating total income only the interest and not the capital part of the annuity payment is taken into account.

As always rates vary, but those on page 64 from Scottish Widows are fairly typical: they show the full Payment and the capital content. You will see that for each £600,000 invested in the annuity the amount payable each half-year rises with age. 50 is the minimum age at which one can buy an annuity and at that age women entering get £642.

70 a half-year and men £646.50.

For anyone entering at 60 the rates have risen to £651.

40 and £660.30 for women and men respectively and the gap between womens and mens payments has widened. 75 is a very late age to buy an annuity and at that age women get £691.

30 every half-year for each £600,000 they invest and men £218.40.

As these are half-yearly payments a 75-year-old man would get his money back in just over two years, though little more than half that would be the capital content.

Naturally no request is made on the forms for medical history. This is one form of insurance where the company has more interest in early death than lengthy life!


Today there are seven basic types - tax points

Payroll Giving
It’s all very easy to organise.
Just ask the Personnel or the Payroll Department at your company and, if they already have a scheme, they will give you the relevant forms.  HM Revenue & Customs’ website has a list of Payroll Giving agencies and explains payroll giving in more detail.

Salon Gold Insurance

Cheaper Insurance for Salons, Freelance Hair and Beauty, and Mobile Businesses - click here

read on: Life Assurance - Tax planning and life assurance

Tax credits - One thing in favour of annuities is the sympathetic treatment they get from the Inland Revenue. (see http://www.hmrc.gov.uk/TAXCREDITS/)

Although the company has to deduct income tax from each annuity payment, the Income Tax and Corporation Taxes Act 2014 laid down that when the person with the annuity (the annuitant as he or she is called) has paid for the annuity himself, tax is only deducted from the interest accruing on the capital invested in the annuity, and not the capital element itself.

This cuts out any annuity which comes by way of a will or any other... see: Life Assurance - Tax planning and life assurance