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Purchased Life Annuity
A Purchased Life Annuity can be bought using any single lump sum and does not have to come from an accumulated pension fund. It is purchased by people who wish to generate an income from a lump sum investment. The income is usually less than that from a compulsory purchase annuity, but it is taxed more favourably than standard annuities. It therefore can pay more after tax than a pension annuity for the same amount of money.
A Purchased Life Annuity can be set up on a temporary basis of between 2-20 years or a lifetime basis.
Purchase Life annuities are taxed in two different ways;
- Capital Part - This part is regarded as return of your capital and not taxed
- Interest Part - This is regarded as unearned income and usually taxed at the basic rate for savings
You will also receive the annuity in two parts, the capital part (which is not taxed) and the interest part (which is taxed according to HM Revenue & Customs).
For more information a Purchased Life annuities and your retirement options simply complete the enquiry form or call us today on 0845 676 1010 to speak directly to our experienced annuity advisers.
