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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.

• Get form R89 'Application to receive an annuity without tax taken off' Opens new window

• Get form R86 'Application to receive a joint annuity without tax taken off ' Opens new window

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.

• Go to form R40 and help notes on completing the form Opens new window

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.

• Tax on retirement annuities

More useful links

• Tax on bank and building society accounts

• Children's savings schemes and accounts

• Saving and investing with ISAs

Useful contacts

• Money, tax and benefits contacts

• National Insurance Contributions Office