Life Policies: annuities payable to deceased/transferor by insurance companies: annuities purchased in joint names
If two individuals of approximately the same age jointly purchase an annuity and each pays one half of the purchase price, no lifetime claim for tax will normally arise if
- each is in normal health
- the annuity was enjoyed equally while they were both alive
- the survivor becomes entitled to the whole annuity when the first one dies.
As well as this no claim for tax will normally arise on the death of the first annuitant to die. Their rights under the contract will have no value immediately before the death and that interest does not pass by survivorship to the other annuitant - IHTA84/S171 (2).
However, a claim may arise if one annuitant
- is much older than the other, or
- is in poor health, or
- provided more than half of the purchase price.
Unless any benefit transferred was spouse or civil partner exempt (IHTM11032), you should ask the taxpayer to
- provide a full copy of the annuity policy
- confirm that the purchase price was provided equally from each annuitant’s own resources, and if not, provide full details
- confirm that neither annuitant reimbursed the other, either directly or indirectly, and if they did, provide full details
- state how the annuity was to be received and dealt with during the joint lives of the annuitants and the life of the survivor
and when this information is received, refer to the Actuarial Team for advice.
Full details of the state of health of each annuitant at the date of purchase may be required to establish the extent of any claim, but these enquiries are only to be made by the Actuarial Team.