UnaVida | Can I sell my annuity?

Can I sell my annuity?

It has always been possible to sell second hand annuities but impractical as once sold, the proceeds would be taxed at between 55% and 70%.

These high tax penalties are being removed with effect from April 2017 and that means that you can convert your annuity for a cash sum to spend as you like.

Instead of the high tax penalties, you will pay income tax at your marginal rate.

If you have a single life annuity then the purchaser will be entitled to an income from your annuity for as long as you live, so you are likely to get more from your annuity if you are in good health.

Of course you may have taken out a joint life annuity, so the chances are that these may be favoured more highly by prospective purchasers.

It is fairly hard to predict how the market in second hand annuities will work in practice, as any prospective purchasers may not be willing to meet the expectation of price from the annuity holders.

Those most likely to benefit (in my opinion) are those people who are in receipt of an annuity that was linked to a guaranteed annuity rate from the proceeds of their pension.

The chances are that they will be in reasonable health and possibly in receipt of a guaranteed 12% or even 14% annuity rate. The companies that were forced to provide these high guaranteed annuities would I believe be reasonably keen to buy them back. That is possible under the new legislation.

As always take advice.

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A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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