Hi there I am not understanding something about taxation of General annuities in UK, but not sure of where I am stuck. For purchased GAs, investment income is taxed on I-E within the LIC Part of the benefit is also taxed on the PH side - this is the portion of the annuity payment in excess of the portion relating to the capital/ premium. But this is taxed at the full marginal income tax rate. How does this avoid double taxation though please? Does the Investment income not also from part of the "Income" portion of the annuity payment? For the Life assurance savings I assumed that double taxation cannot happen as the I-E is taxed at insurer a the basic rate. On the PH side, the excess of benefit over premiums paid is taxed at marginal over basic rate thus not double taxed. Please correct me if I have not understood this as intended. Thanks so much!
Hi again... OK I think I get this. The income portion of the annuity - which the PH pays tax on- is removed from the company I-E amount and so avoids the double taxation
Yes, that's right: the income component is included within 'E' (per Chapter 7 page 10) and hence is removed from the I minus E calculation
