DT Applications and claims - Types of income: Pensions and Annuities
Annuity Purchase Deferral - draw down paymentsThe option to defer the purchase of an annuity was introduced in 1995 and occurs where someone has reached pension age but chooses not to buy an annuity that will provide their pension. Instead they decide to withdraw a certain level of income from their retirement benefits and to buy an annuity at a later date (ICTA88/S634A).
At some later date (but no later than age 75) when annuity rates have hopefully improved the person can go back to the insurance company and purchase an annuity with the balance of the fund.
Applications under the terms of a Double Taxation Agreement (DTA) for relief from UK tax in respect of income draw down payments should be dealt with in the same way as if an annuity has been purchased.