Commentary on Sections Overview Overview Section 717: Exemption for part of purchased life annuity payments
2748.This section is based on section 656 of ICTA and sets out the extent of the exemption.
2749.Subsection (1) sets out the exemption and makes it clear that an annuity payment is only exempt to the extent provided in section 719.
2750.Subsection (2) makes it clear that not all annuity payments made under a purchased life annuity are exempt and signposts section 718 which sets out the excluded annuities.
2751.The Inland Revenue does not interpret “annual payment” in section 656(1) of ICTA as restricted to annual payments chargeable under Schedule D Case III. So the exemption is not dependent on the source of the annuity payment. Foreign annuity payments may therefore benefit from the exemption.
2752.Subsection (3) indicates that a claim needs to be made for the exemption to apply but does not specify to whom that claim is made. Section 878(4) draws attention to the rules in the TMA, which apply for the purposes of this Act. Those rules require claims to be made to “an officer of the Board.” See Change 149 in Annex 1.
2753.The requirement for a claim is not in the source legislation but is in secondary legislation supporting sections 656 to 658 of ICTA (see regulation 4 of the Income Tax (Purchased Life Annuities) Regulations 1956 SI 1956/1230, as amended) (“the 1956 Regulations”). The claim provision has been promoted to primary legislation. That will change the status of the provision as it will no longer be possible to change it or revoke it through further regulations. See Change 117 of Annex 1.