Payment Of Pension Annuities

If an annuity is being paid as a result of a pension scheme, personal pension or self-employed retirement annuity contract, it cannot be accorded purchased life annuity treatment and is taxable in full.

Pension annuities are taxed under the provisions of the Income Tax (Earnings and Pensions) Act 2003. The pension provider has to operate pay as you earn (PAYE) which effectively deducts income tax at the appropriate rate through a system of code numbers.