IHT on PLA and Whole of Life

benjaminfabi

Hi,

If someone reduces their taxable estate, using a lump sum to fund a purchased life annuity and then using the capital return to fund a WOL premium up to the £3k annual exemption, is the premium immediately exempt?

richardgough

Yes.
Assuming annuity purchase is not linked to the Whole of Life - i.e. different providers.
The annuity purchase on its own is not an IHT event.
Whole of Life premium covered by £3k annual exemption so all good.

benjaminfabi

Nice one thanks @richardgough

parawhat

Also see here @benjaminfabi:

https://library.croneri.co.uk/cch_uk/wfpt/9-5

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm04065