RE414 - Interest paid: Loans for other purposes: Interest on loans to buy life annuities Section 365 ICTA 1988

Loans advanced before 27 July 1999

A loan taken out to buy an annuity for the borrower's life, or the life of the borrower and one or more other person, is a qualifying loan if

• the loan was made before 9 March 1999;
• the loan was made as part of a scheme under which at least 9/10ths of the loan was used to buy the annuity;
• each annuitant was 65 or over when the loan was made;
• the loan is secured on a property in the United Kingdom or the Republic Ireland;
• one of the annuitants has an interest in the property - see Re342;
• the property was used as the main residence of the annuitants immediately before 9 March 1999 (unless the loan was made before 26 March 1974); and
• the annuity terminates on the death of the annuitant, or any surviving annuitant, and on no other event.

Loans advanced on or after 27 July 1999

The above requirements, must be satisfied. However, for certain loans the first, second and sixth requirements are treated as satisfied if:

• the loan was made on or after 27 July 1999;
• the loan was made as part of a scheme under which all or part of the loan was used to repay a previous loan satisfying all of the above conditions used to buy an annuity;

Where a new loan is only partly applied in repaying a previous, qualifying loan the second condition above is satisfied if at least 9/10ths of the balance is used to buy a new life annuity.

The relief is usually given through the MIRAS system, see RE500 onwards.

You should refer all cases to Savings and Pension Schemes,Technical.