I am dealing with a discretionary PIT which was set up in 2016. One of the investments the trustees purchased was a PLA to provide a regular cost of living income to the beneficiary. As the PLA was taken out by the trust I am aware that there is no capital/income element but am I correct that the annuity payments are exempt from income tax under section 733(3) ITTOIA. If the payments were ad hoc would they still be exempt?
Any thoughts appreciated.
Many thanks
Kim
Not sure I understand the issue.
ITTOIA 2005 s 731 provides “(1) No liability to income tax arises for the persons specified in section 733 in respect of periodical payments to which subsection (2) applies or annuity payments to which subsection (3) applies”.
Is this not confirmation of the exemption for annuity payments?
Difficult to understand how annuity payments could be ad hoc?
Malcolm Finney
Thanks Malcolm
Within the annuity the payments can be increased or decreased. In 2020 the payments were decreased to zero, as the annuitant had received further money and didn’t require the annuity payments. The trustees now want to increase the annuity payments as the annuitant requires extra care costs but this will probably only be temporary.
Whilst they are annuity payments I didn’t know whether I was over thinking the “periodic payments”.
As always thanks for your help.
Kim Jarvis