Reclaiming tax on purchased life annuity income

If you're on a low income and have a purchased life annuity investment you could be paying Income Tax when you don't need to. If this is the case, you can register to get the income tax-free. You can also claim a refund of any tax you've overpaid.

Tax and tax reclaims on purchased life annuities

If you've got a purchased life annuity, 20 per cent tax will be automatically deducted from the income element you receive from it. However if your overall level of income means you’re not a taxpayer, you can ask to receive purchased life annuity income tax-free.

To make a claim you'll need to fill in form R89 'Application to receive an annuity without tax taken off'. If you hold a joint life annuity you need to complete form R86 'Application to receive a joint annuity without tax taken off'.

Send the form to whoever pays your annuity. You can download the forms below.

How to claim tax back

If you think you've paid too much tax on your purchased life annuity you'll need to fill in a form R40 tax repayment form. You'll have to do this for each year you think you paid too much tax.

In most cases you'll get back the tax you've overpaid as long as you claim on time.

Time limits for claiming back tax

The time limits for claiming a refund are shown in the table below. If you don't make a claim within the time limit you'll miss out on any refund due.

Tax year	Tax year ended on	You must claim by
2005-06	5 April 2006	31 January 2012
2006-07	5 April 2007	31 March 2012
2007-08	5 April 2008	5 April 2012
2008-09	5 April 2009	5 April 2013
2009-10	5 April 2010	5 April 2014
2010-11	5 April 2011	5 April 2015

Go to form R40 and help notes on completing the form

What to do if your circumstances change

Your income and tax allowances can change from year to year - and during the year. So you may find your income goes up and your tax allowances no longer cover it.

If this happens it's important you tell your annuity provider straight away so they can start taking tax off your payments. Otherwise you may have a tax bill at the end of the year.

Getting help

For help on reclaims for purchased life annuity income you can call the HMRC Retirement Annuity Helpline on 0845 366 7868. The helpline is open from 8.00 am to 8.00 pm Monday to Friday, and from 8.00 am to 4.00 pm on Saturday.

If you are calling from outside the UK you can contact the helpline on +44 151 471 8436.

Tax on other types of retirement annuity

Since April 2007 all other types of retirement annuity (personal pensions taken out before July 1988) have been taxed through the PAYE (Pay As You Earn) system, so you should be paying the right amount of tax if any is due.