Can I transfer my annuity income to my wife?

22 August 2016

Q

I receive a small income from an annuity that I pay income tax on. Is it possible to transfer the annuity into my wife’s name as she is a non-taxpayer?

From
DS/Walsall

A

I’m afraid an annuity can only be paid to the person who bought it with their pension fund.

The only time it is paid to someone else is when the person who bought the annuity arranged a spouse’s pension when setting up the annuity and then dies first, or they arranged a guarantee period to ensure payments for a minimum term and then died before the term was up.

However, you could reduce the tax you pay on your annuity income by using your Transferable Tax Allowance.

 

Married couples can move part of their personal allowance – the amount you can earn before income tax is levied – to their spouse.

As your wife does not pay tax, she could transfer £1,100 of her personal allowance to you, as long as you are not liable for income tax above the basic rate.That would mean you could receive an additional £1,100 in income before tax would be due.