This example illustrates points made in E1.960 and E1.960A.
Example—calculation of refund due to trustees from a free of tax annuity
Jane lives in Manchester and has been bequeathed an annuity of £7,000 'free of tax' (ie the annuity has been granted with freedom from tax at the annuitant's effective rate). Jane also receives a small salary from a part time job of £5,500 from which tax is deducted of £1,100.
The trustees are obliged to pay her an amount that has been grossed up at the basic rate. Tax is withheld from that gross payment
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