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PENSION PRODUCTS
COMPULSORY PURCHASE ANNUITIES
Taxation
Pensions bought from personal pension, stakeholder funds and company pension schemes are normally taxed under the PAYE system. However, depending on the amount of the annual pension, we may not deduct any tax due at source.
If there are any pensions paid from retirement annuity plans, we will normally deduct basic rate tax from the payments before we send them to the annuitant.
Frequently Asked Questions:
Can we add all of the annuitant's Scottish Amicable pensions from different sources together?
It is important to note that each pension from each different source is separate. If they have different types of pensions with us, we can't normally add these together when calculating the above amounts and have to pay them separately to them.
Example: Mr B has a pension from his employer's scheme of £500 p.a. and also an income from personal pension plans of £900 p.a. Although in total these exceed £1000, we do not deduct tax from either of these plans and will not report these to the Inland Revenue.
Why have we not sent the annuitant a P60?
The Inland Revenue do not require P60 forms to be produced where no income tax has been deducted from the pension payments. If, however,
How much are the Personal Allowances?
Details of the current Personal Allowances are available from the Inland Revenue website.
Can a retirement annuity (s226 plan) be paid to to the annuitant without tax being deducted?
Pensions are normally paid from retirement annuity contracts after basic rate tax has been taken off. If the annuitant's tax allowances are greater than their total taxable income, they can ask us to pay the retirement annuity without deducting any tax. We will give them a form (R89) on which to make this request.
If they are due to pay some tax, but less than the amount that has been deducted from their retirement annuity, they can ask for a refund from the Inland Revenue.
More information on Income Tax is available in leaflet IR121 - Income Tax and Pensioners - available from local tax offices.
Mortgage Products
Legacy
Disclaimer
Pension Products
Contact
Protection Products
Investment Products
General
COMPULSORY PURCHASE ANNUITIES
Pensions bought from personal pension, stakeholder funds and company pension schemes are normally taxed under the PAYE system. However, depending on the amount of the annual pension, we may not deduct any tax due at source.
If there are any pensions paid from retirement annuity plans, we will normally deduct basic rate tax from the payments before we send them to the annuitant.
| Yearly Pension | Tax Position |
| Up to £1000 | The Inland Revenue requires that each pension, if less than £1000 a year is paid without any tax deductions and that pension providers do not report the payments to the Inland Revenue. So, if the annuitant has more than one pension from us and/or other income and the total is more than their personal allowance for income tax purposes, they should report the pension payments to the Inland Revenue to avoid getting into tax arrears. |
| More than £1000 but less than their current personal allowance | The Inland Revenue requires that each pension is paid without any tax deductions. But we do have to report the payments to the Inland Revenue. So, if the annuitant has other pensions from us and/or other income, they should report the pension to the Inland Revenue to avoid creating tax arrears. |
| More than personal allowance | We will deduct tax, at source, under the PAYE rules, except for retirement annuity (s226) plans. |
Frequently Asked Questions:
Can we add all of the annuitant's Scottish Amicable pensions from different sources together?
It is important to note that each pension from each different source is separate. If they have different types of pensions with us, we can't normally add these together when calculating the above amounts and have to pay them separately to them.
Example: Mr B has a pension from his employer's scheme of £500 p.a. and also an income from personal pension plans of £900 p.a. Although in total these exceed £1000, we do not deduct tax from either of these plans and will not report these to the Inland Revenue.
Why have we not sent the annuitant a P60?
The Inland Revenue do not require P60 forms to be produced where no income tax has been deducted from the pension payments. If, however,
- they have more than one pension with us
- their total income is greater than their personal allowance,
How much are the Personal Allowances?
Details of the current Personal Allowances are available from the Inland Revenue website.
Can a retirement annuity (s226 plan) be paid to to the annuitant without tax being deducted?
Pensions are normally paid from retirement annuity contracts after basic rate tax has been taken off. If the annuitant's tax allowances are greater than their total taxable income, they can ask us to pay the retirement annuity without deducting any tax. We will give them a form (R89) on which to make this request.
If they are due to pay some tax, but less than the amount that has been deducted from their retirement annuity, they can ask for a refund from the Inland Revenue.
More information on Income Tax is available in leaflet IR121 - Income Tax and Pensioners - available from local tax offices.
