frugal90 wrote:She'll have her annual allowance then pay tax on the extra. Because the annuity has only started, very little tax this year.
Ah but isn't there more to it than that? Is this a purchased life annuity? As TJH said up thread I too think part of some types of annuity payment can be a return of capital and so you don’t pay income tax on the capital. L&G have this to say
A purchased life annuity is an annuity that you buy with money that doesn’t come from a pension pot. So you could invest money from a house sale, your savings or an inheritance in one. Any income from it is untaxed. That’s because the government assumes that you’ve already paid tax on the money you spend on it.
https://www.legalandgeneral.com/retirem ... f-annuity/