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HMRC internal manual

Inheritance Tax Manual

Life Policies: annuities payable to deceased/transferor by insurance companies: introduction

An annuity (IHTM16211) is a yearly entitlement to a particular sum of money. The annuity may be payable at some other frequency, usually monthly, quarterly or half yearly. This entitlement may arise from a number of different sources, and it is important to determine the type of the annuity before deciding on the correct treatment for Inheritance Tax. 

The instructions at IHTM20632-IHTM20635 relate only to annuities that are

  • linked to life policies


  • which are not retirement annuities or pensions.

These are normally referred to as purchased life annuities (IHTM20632).