Are annuity payments taxable?
If you choose to buy an annuity with your pension pot, the money invested, when it grows will be tax-free, until it is paid out to you. It will be taxed at the particular rate applicable to you.
This rate is dependent on a variety of factors, including:
- Your pension income
- Income from employment
- Interest payments
- Income from property sales
- Income from abroad
- Certain benefits
If your annuity is purchased within a tax-advantaged wrapper such as The Retirement Account, from Retirement Advantage, you may be able to reinvest some or all of the annuity, without paying tax on income that you don't need; you will only need to pay tax when you withdraw it. This type of set-up can only be arranged through a financial adviser.
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