Commentary

I5.1305 Taxation of beneficiary's annuity

IHT, trusts and estates

I5.1305 Taxation of beneficiary's annuity

I5.1305 Taxation of beneficiary's annuity

An annuitant under a trust is in the same position as any other person entitled to an annuity. An annuity is an annual payment, which is assessable as a separate source of miscellaneous income1 — see D1.103 and E1.510.

If it is paid under a discretion, the trustees must deduct tax at the trust rate (currently 45% from 2013/14, see I5.1010), otherwise it is subject to deduction at the basic rate, whether or not it is paid out of taxed income. If the annuity is given by will 'free of tax' the effect is that

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