Annuity and inheritance/income tax

[DefConOne]

My aunt died a few months ago and has left her estate to be shared between several family members including me. I am one of the executors. A large proportion of her savings are in an annuity with fixed payments for several years. This annuity takes the value of her estate over the threshold for inheritance tax. What does seem unfair is that we will also have to declare the annual income from the annuity in a self assessment and pay income tax on as well. I am thinking maybe we need an accountant at this point. Can any wise mumsnetters advise?

You only pay income tax whilst alive. The lump sum will pay IHT. You dont double pay

Are you sure that the annuity will continue paying out to all the will beneficiaries?

Annuities are generally associated with pension pots, and set up to pay for the owners lifetime and then to a named beneficiary for their lifetime.

Don’t know the IHT answer, a solicitor should be able to help.

In terms of income tax, I am guessing each beneficiary’s portion of the annuity payout may be counted as income in a similar way to bank interest.

Like you say, maybe consult an accountant for the latter.

Are you sure that the annuity will continue paying out to all the will beneficiaries

Annuities are sold with guarantee periods.

I am guessing no shit.

OP you will fill in a tax return for your Aunt as part of the process.