IPTM4350 - Purchased life annuities: partial exemption scheme: procedure

The procedures are set out in The Income Tax (Purchased Life Annuities) Regulations 2008 SI2008/562 as amended by SI2008/1481. The regulations refer to a ‘relevant person’ which means:

• a UK-resident insurance company, UK branch or permanent establishment of a non UK-resident insurance company, or a friendly society
• a tax representative of a non-UK insurer see IPTM4400 onwards
• a person appointed in accordance with arrangements made with HMRC under regulation 18.

In what follows all of these are referred to as an ‘insurer’ whilst an ‘annuitant’ means the person or persons entitled to receive the annuity from the insurer.

The sequence is as follows.

1. The insurer completes Part A of form PLA6, available from the HMRC website at www.hmrc.gov.uk and sends it to the annuitant in time for the annuitant to complete and send it back to them before the first annuity payment becomes due and payable. Where a UK tax representative is appointed, this step must be completed within 30 days of the date of the first annuity payment.
   
   
2. The annuitant, or all of them if there are more than one, completes Part B.
   
   
3. One of the annuitants answers all three questions in Part C and signs the declaration at the end of that section and returns the form to the insurer.
   
   
4. The insurer completes Part D, including calculating a figure for the exempt capital amount and sends the fully completed form to the annuitant within 30 days beginning with the date of receipt of the form from the annuitant or the date of the first annuity payment.
   
   
5. The insurer sends a copy of the fully completed form to HMRC’s Centre for Research and Intelligence, Cardiff (CRI) within 3 months of the date of the first annuity payment.
   
   
6. If the annuitant does not send the form back to the insurer (step 3), the insurer must send details of the annuity to CRI within 3 months of the end of the month in which the first annuity payment is due and payable. Additionally the insurer unless a non-UK insurer, must assume there is no exempt element and deduct tax from the whole of each annuity payment.
   
   
7. The annuitant uses form PLA6 to help them complete the SA Tax return.

CRI’s postal address is

Centre for Research and Intelligence
Ty Glas Road
Llanishen
Cardiff CF4 5YF

Insurers do not have to use form PLA6. They can develop their own version. An insurer thinking of this should consider obtaining a form PLA6, as explained above, as this includes all of the information insurers need to obtain/supply to meet their legal requirements. CT&VAT (Technical) Insurance Group suggest that an insurer considering this action send a copy of their draft form to them before bringing it into use.