Purchased Life Annuity

A Purchased Life Annuity works by investing your capital into an annuity.

On day one this capital is outside your estate for Inheritance Tax purposes, as, for capital value purposes it has no value other than a regular income stream.

The income stream would fund a life insurance policy for the amount you have placed into the purchased life annuity. On death the value which is in trust will be paid to the beneficiaries free of UK Inheritance tax. The income stream is very tax efficient as a large proportion is considered as return of capital and is tax free, unlike a conventional annuity.

Disadvantages:

On death your beneficiaries will only receive the capital value of the insurance policy. The trusts mentioned in the links below would give you a potential for growth on the money invested in the long term
You have lost complete control of the capital

Advantages:

Day-one Inheritance Tax saving for all the capital placed into the purchase life annuity
Tax efficient income
Guaranteed income and guaranteed capital to beneficiaries

Call one of our Inheritance Tax Planning advisers on 0800 0112825 or complete the general enquiry form in confidence to see how we can assist you.

Visit the pages below to find out more about possible inheritance tax solutions available to you.