IHTM16211 - Annuities: what is an annuity?
An annuity normally takes the form of a fixed amount of income to be paid out of a settled fund. It is usually described as an amount per year (per annum) and hence the name. For example, ‘Â�400 a year to my friend Freda Smithâ€�. In practice it would be paid monthly or even weekly. »Ê¹ÚÌåÓýapp settled fund itself might be very large, producing income far above that required to service the annuity.
»Ê¹ÚÌåÓýapp person taking the benefit of the income, known as the annuitant, has an interest in possession in the fund to a specific extent.