How will my annuity be taxed?


Any income from an annuity is treated as earned income and normal UK tax rules apply. If your yearly earnings are over the basic rate tax threshold (£12,570 for the 2021/2022 tax year) you’ll pay tax on it. The amount of tax you pay depends on your total income for the year and your tax rate.

You can take up to 25% of your pension savings as a tax-free lump sum before your regular income payments start.

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