IPTM6200 - Immediate Needs Annuities: introduction

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.