Taxation of inherited annuity

TcpnT

Like many on here at the moment I'm giving serious consideration to buying an annuity with all or some of my crystallised drawdown fund. I'm looking at 100% spouse pension as my wife has little pension provision of her own but need to be absolutely clear on the tax treatment in the even of my death.
My reading of the relevant HMRC manual is that an annuity inherited by my wife in the event of my death before age 75 will be exempt from income tax for the rest of her life (in the same way as an inherited drawdown pension would be). 
Do members agree with this - or have I misunderstood in some way?

Dazed_and_C0nfused

TcpnT said:

Like many on here at the moment I'm giving serious consideration to buying an annuity with all or some of my crystallised drawdown fund. I'm looking at 100% spouse pension as my wife has little pension provision of her own but need to be absolutely clear on the tax treatment in the even of my death.
My reading of the relevant HMRC manual is that an annuity inherited by my wife in the event of my death before age 75 will be exempt from income tax for the rest of her life (in the same way as an inherited drawdown pension would be). 
Do members agree with this - or have I misunderstood in some way?

Do you have a link to the relevant HMRC manual you could share?

TcpnT

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm072210

I think this is the relevant one

SVaz

It’s correct.  Income tax will only be due if you die after 75.  

Sipps/DC pensions are treated the same way. 

TcpnT

Does anybody know how this would happen in practice? Would the annuity provider make the necessary checks and put this in place automatically on the death of the first policyholder. It's not a subject I recall being discussed here over the years - I guess because of the low take up of annuities until recently.