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HMRC internal manual

Insurance Policyholder Taxation Manual

Immediate Needs Annuities: tax treatment from 1 October 2004: payments made to a registered care provider: meaning of immediate needs annuity and care provider

‘Immediate Needs Annuity’: ITTOIA05/S725 (2) and (3)

A policy will qualify as an Immediate Needs Annuity if,

  • it is a Purchased Life Annuity (‘PLA’) - see IPTM4220, and

when the policy was taken out

  • one of the purposes of it was the provision of personal care or nursing care for the person protected under the policy
  • that care was needed because of mental or physical impairment, injury, sickness or other infirmity which was expected to be permanent.

Care provider: ITTOIA05/S726

A care provider is one who carries on such a business and is registered under therelevant Act to do so. Payments to local authorities for care of the person protectedunder an Immediate Needs Annuity also qualify for relief.

Care: ITTOIA05/S725 (4)

Care includes accommodation, goods or services that are necessary or desirable becauseof mental or physical impairment, injury, sickness or other infirmity.

There will be occasions where some ordinary domestic services are also provided. Thesewill not disqualify payments from the exemption as long as they remain incidental to theprovision of the care for which the policy was taken out.

Further reference and feedback IPTM1013