Annuities and Tax

Redlander

If you use your pension pot to buy an annuity, your income from it will be taxed. This seems fair because the pension pot benefitted from tax relief.

However, if you bought the same annuity with your own money (on which tax has already been paid), it seem unfair that the income from it to be taxed, because that would amount to being taxed twice for the same income.

Are there any annuities which you can buy using your normal savings and not your pension pot, the income from which is not subject to tax?

Dazed_and_C0nfused

This might be worth a read?

https://www.canadalife.co.uk/retirement/purchased-life-annuity/

dunstonh

If you use your pension pot to buy an annuity, your income from it will be taxed. This seems fair because the pension pot benefitted from tax relief.

Only 75% of it is taxed as you would draw 25% tax free.

However, if you bought the same annuity with your own money (on which tax has already been paid), it seem unfair that the income from it to be taxed, because that would amount to being taxed twice for the same income.

Not true. 
a) you cannot purchase the same annuity from your own money.  Lifetime annuities are bought from pension funds. Not personal cash.
b) A Purchased life annuity, what you would use from personal money, is not taxed as you think.

Albermarle

Dazed_and_C0nfused said:

This might be worth a read?

https://www.canadalife.co.uk/retirement/purchased-life-annuity/

It is probably worth noting that the market for purchased life annuities is very small, and annuity rates available will probably be worse than for a Lifetime annuity . Presumably due to less competition .

Malthusian

Albermarle said:

It is probably worth noting that the market for purchased life annuities is very small, and annuity rates available will probably be worse than for a Lifetime annuity . Presumably due to less competition .

Traditionally it was also because people would only buy an annuity with money in their own hands, if they were confident they were going to live for a long time, while pension annuities received a greater cross-subsidy from people in average or poor health. 
This should in theory be less of a factor today due to pension freedoms and the increasing popularity of enhanced annuities. (I.e. fewer people are railroaded into buying an annuity with their existing pension provider after ticking a box on their "you have reached your selected retirement date" pack.) But the gap between the pension annuity rates vs PLA rates certainly remains.

Linton

Purchased life annuity taxation is based on a significant % of your income being simply a return of investment and so taxed at a zero rate.