Death Benefits of Annuities

Annuities have a new tax treatment on death:

If death occurs before age 75, any beneficiary can receive income payments tax free.

If death occurs after age 75, any beneficiary can receive income payments at their marginal rate of tax.

If Annuity Protection Death Benefit is triggered:-

If death occurs before age 75, any beneficiary can receive the lump sum payment tax free.

If death occurs after age 75, the lump sum paid out would incur a 45% tax charge for the current tax year 2015/16. From 2016/17 the lump sum is paid out at the beneficiaries highest marginal rate.