Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Annuity definition

What does Annuity mean? An annuity is a legally binding arrangement under which a payer (such as an insurer, trustee, estate or other grantor) must make regular, periodic payments to a named recipient (the annuitant), usually for the annuitant’s life or for a fixed term. The term is descriptive and used across pensions, life insurance, wills and trusts, property and litigation settlements; context‑specific definitions appear in pensions and tax legislation in the UK and Ireland. Usage is broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. Key features typically specified include: duration (life, term certain, joint‑life or reversionary), start date (immediate or deferred), payment...

Annuities in Wills: Classification, Provision, Timing, Duration, Source of Payment, Arrears, Interest, Valuation, Priority, Abatement and Insolvency (England and Wales)

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Practice notes

An annuity is a periodic sum paid out of personal estate. See Savery v Dyer (1752) Amb 139 (not reported by LexisNexis®). It is personalty (Parsons v Parsons). An annuity is a legacy, being a bequest of whatever capital is needed to produce the annuity amount. They can be useful where a drip-feed approach is desired. In essence, they are legacies settled by instalments over a beneficiary’s lifetime. The Will ought to specify whether:

executors may buy the annuity using estate capital;
a sum from income is reserved to finance the purchase;
both capital and income are earmarked to fund the purchase;
the annuity is acquired during the executors’ lifetimes (if funds permit), with any deferred annuity vesting in trustees on death;

Different routes carry different tax consequences, for capital and income. Annuities may arise:

inter vivos by deed;
by Will;
by or under statutory powers

Classification of annuities by Will

An annuity granted by...

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Web page updated on 21/05/2026

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