Tax charge on annuity sales to be reduced from April 2017
The Government has confirmed that from 6 April 2017, tax restrictions for people looking to sell annuities will be removed, giving those with existing annuity, and anyone who purchases an annuity in the future, the freedom to sell their right to future income streams for an upfront cash sum.
Currently, people wishing to sell their annuity income face a 55% tax charge, or up to 70% in some cases. This charge is to be removed, so that people will only be taxed at their marginal rate.
Under the new changes, retirees will be able to take the annuity as a lump sum, or access the new flexible drawdown products introduced in April 2015.
The Government is working with the Financial Conduct Authority (FCA) to develop appropriate steps to regulate the market. The FCA will consult in 2016 on proposed rules for the secondary annuities market.