The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The terms of a trust may require the payment of an annuity to a beneficiary. Alternatively, discretionary trustees may decide to pay a fixed annual sum to a beneficiary for a pre-determined period. In both cases, the beneficiary has a right to the annuity, and effectively has an interest in possession in a fixed portion of the income.
The tax treatment of annuities arises from three separate provisions in the legislation:
the income which funds the annuity, is not subject to the trustees discretion or available to be accumulated. Therefore, that portion of income is not subject to trust rates of tax, regardless of the status
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