Income from an annuity will be treated as earned income and will be taxable.
If your client decides to take a cash sum, it's normally tax-free.
Where applicable we'll deduct tax from each income payment before it's paid.
HM Revenue & Customs will notify us of the relevant tax allowances and we'll take these into account in working out how much tax to deduct.
If your client selects a joint life annuity, or a guaranteed period, and dies before they are 75, any income paid after the client’s death will not normally be subject to income tax, although any income paid to the client or dependant’s estate may be subject to Inheritance Tax.
Tax rules may change in the future.