Immediate Needs Annuity

Moonwolf

It looks like someone I have LPAs for is going to need a lot more personal care soon. Two quick questions.

They have a Prudential Bond, could this be used towards an Immediate Needs Annuity?

Can the payee of an immediate needs annuity be changed, so if we get one for homecare and they have to go into a home could it be changed to cover the care home costs?

They are 94 and my inclination would be to try and cover around £50k a year from an annuity and use their pensions for the rest, with what should be enough savings left to cover over inflation price increases.

LHW99

AFAIK immediate care needs annuities need to be bought through an IFA, as there are not many (2?) cos. that offer them and they don't sell direct to the public.

SOLLA has advisers working in this area, if you find one, they would answer your questions.

https://societyoflaterlifeadvisers.co.uk/

starving_artist

With the immediate care annuity from Just, as long as the income from the annuity is paid directly to a registered care provider it can be transferred to a different registered care provider. Otherwise if it is paid to the person taking out the policy it becomes liable to income tax.

TcpnT

https://forums.moneysavingexpert.com/discussion/comment/81934280#Comment_81934280

This is correct but the full income is not taxable. When paid directly to the annuitant it is treated as a purchased life annuity and only the part deemed to be income is taxed at marginal income tax rate. The rest of the payment is treated as return of capital. In the case of my 93 year old mother only 16% of the payment is taxed as income. At basic rate of 20% that means that the tax deduction is only about 3% of each payment.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81934841#Comment_81934841

If the tax treatment of the taxable element is the same as a normal PLA then it's treated as savings income.

Which can be beneficial for some people given the differing tax rates that currently apply to savings income.

TcpnT

Yes sorry - the taxable part of each payment is taxed as savings income not earned income