IPTM6220 - Immediate Needs Annuities: tax treatment: payments made to the insured person or after their death

Payments made directly to the insured person

Any payment, or any part of any payment, made

• directly to the insured person
• to persons other than a registered care provider, or
• for benefits other than care of the person protected under the policy, except where these benefits are incidental to the care

cannot qualify for the exemption, even if it is from a policy which qualifies as an Immediate Needs Annuity under ITTOIA05/S725(2) and (3)- see IPTM6215. Any such payment or part of a payment has therefore to be treated as taxable income of the insured person.

Payments after the death of the insured person

Some policies may allow for payments to continue to be made after the death of the insured person, perhaps to their estate or to another person. Any such payments cannot qualify for the exemption because they can no longer be for the benefit of the insured person. The tax treatment of such payments will depend upon the terms of the policy and the nature and circumstances of the recipient.