Annuities

HM Treasury written question – answered on 26th March 2015.

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Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

To ask Mr Chancellor of the Exchequer, with reference to the figures in table 2.1 of Budget 2015 on a secondary market in annuities, how many people receiving an annuity income will have to reassign that income to a third party and take the value as a lump sum in order to generate the projected additional revenues of £535 million in 2016-17 and £540 million in 2017-18.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

To ask Mr Chancellor of the Exchequer, what estimate the Government has made of the additional cost to the public purse arising from additional (a) social security payments and (b) social care costs of people in receipt of annuity income reassigning that income to a third party in order to receive the value of that annuity as a lump sum.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

To ask Mr Chancellor of the Exchequer, with reference to the figures in table 2.1 of Budget 2015 on a secondary market in annuities, for what reason income tax revenue is projected to fall by £130 million in 2018-19 and £120 million in 2019-20.

Photo of Andrea Leadsom Andrea Leadsom The Economic Secretary to the Treasury

From April 2016, the government will change the tax rules to allow people who are already receiving income from an annuity to assign that income to a third party, subject to agreement from their annuity provider. The proceeds of the assignment could then be taken directly or drawn down over a number of years, and would be taxed at their marginal rate, in the same way as those taking their pension after April 2015.

Details of how the costs of this measure have been calculated including the number of annuities that could be assigned can be found in the Budget 2015 Policy Costings document here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413895/Policy_Costings_18_00.pdf

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