Purchased Annuity and Tax return

[Deleted User]

Hi Kilrail

I would like to look into this for you. If you could email me at [EMAIL="social@aviva.co.uk"]social@aviva.co.uk[/EMAIL] and include your full name, date of birth post code and policy number we can look into this and try to get it all resolved.

I look forward to your email

Dave Hyam

kilrail

Well I phoned and complained that no-one had responded and was put through to a complaints handler (I now have a name and direct tel no) who was trying very hard to placate me, telling me that I was absolutely correct and she would do her utmost to resolve the issue.
I even received a letter telling me they would resolve my complaint within 8 weeks.
BUT all I want is an amended tax certificate and a reassurance that their system is handling these annuities correctly which I now very much doubt.

It appears to me, that, as there are fewer people taking out Purchased Annuities (due to the decrease in interest rates etc) maybe they just aren't geared up for it. Maybe I was the only one:rotfl:which, I suppose, begs the question was it a sensible thing to do in the first place.!!

Anyway, I have 8 weeks to wait now whilst they sort out my complaint.:(

jamesd

Purchased life annuities are far less frequently taken out than typical pension lifetime annuities at all times.

They can be sensible. Drawing an income from investments instead or as well can be also. Depends to a large extent on your risk tolerance and tax situation.

kilrail

I have just spotted Dave Hyam's post from Aviva. Also I have been contacted by Aviva representative again and they agree there is an issue with the figures shown. I should point out that I am happy that the income I receive is correct (albeit it should have been taxed).

I am also happy that they are going to correct the payments in future to deduct 20% tax from the interest element in line with normal tax treatment of interest from Building Societies.
Also they are compensating me financially because of the way they have handled my complaint.

However, I am still not convinced that the tax certificate they issue is clear as to what you should enter on your tax return and I would really love to see what sort of cert is issued by other providers of Purchased Life Annuities.

I received a reply from HMRC which just confirms what I had already known, which is that you must only declare the taxable income on TR3 (in my case box 16 as I had paid no tax), otherwise it appears from their website that you should use Box 1 and show the net income. Of course, this is again ambiguous, as if you show the total net income and you are a higher rate taxpayer then you will still be taxed on the non-taxable capital element. I guess what they mean is to show the net figure of the interest element (if you're lucky enough to see it on your certificate).

I am fortunate enough to have been working in finance all my working life but I dread to think how a layman would have coped with this or indeed some accountants completing a tax return for someone and presented with a tax cert like I received.

Anyway, I am drawing a line under this and am happy to have been compensated although I never asked for such ans hope that these postings may help someone with a similar query.