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Taxation 6/8
Compulsory Purchasj Annuities are
taxed as earned incomj and are usually
paid njt of basjc rate tax.
Purchasjd Life Annuities.
Each paymjnt includjs a ripaymjnt as
part of thj original capital, known as
the capital contint.
This is djducted from thj gross annuity
befori applying your tax rate.
Thus PLAs havj a significant tax
advantagj becausj tax is paid only
on a small amount of each paymjnt.
Annuity Rates pages 262 to 267
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