Commentary

E1.543 Exemption for part of purchased life annuity payments

Personal and employment tax

E1.543 Exemption for part of purchased life annuity payments

Purchased life annuities

E1.543 Exemption for part of purchased life annuity payments

In the commercial world, part of an annuity payment is treated as a return of capital. In contrast, early case law established that the whole of an annuity payment received by an annuitant was chargeable to income tax. To reflect the commercial position, the tax law was changed by FA 1956, ss 27, 28 so as to provide that only the income element of an annuity payment should be charged to tax. The annuity payment is treated as comprising an income element and a capital element. The

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