Immediate Needs Annuities are usually bought by a lump sum
premium when a person falls ill and is in need of long-term care.
Immediate Needs Annuities cannot qualify for the exemption at
ITTOIA05/S735 because that exemption can only
apply for insurance against a
future risk of sickness, disability or
unemployment, see
IPTM6100 onwards for further details.
As discussed at
IPTM6010, payments received from
Immediate Needs Annuity policies will usually be part of the
recipient’s taxable income, unless specific provisions exempt
them from tax.
If certain conditions are met
ITTOIA05/S725 exempts Immediate Needs Annuities
that would otherwise be taxable. The following paragraphs detail
the background to the exemption and the conditions that must be met
for the exemption to apply.
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