Inheritance tax gifts

Zac10001

My reading indicates regular payments out of income must be paid to a recipients SAVINGS acct. Does this means payments to a recipients Current account would not qualify as free from inheritance tax?

xylophone

My reading indicates regular payments out of income must be paid to a recipients SAVINGS acct. Does this means payments to a recipients Current account would not qualify as free from inheritance tax?

Where did you read this? Nothing here about to which type of account such gifts must be made...http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm14231.htm

Daniel54

Zac10001 wrote: »

My reading indicates regular payments out of income must be paid to a recipients SAVINGS acct. Does this means payments to a recipients Current account would not qualify as free from inheritance tax?

The Gov.uk website uses regular payments into a savings account as an example.It is however not a stipulation and regular payments into a current account qualify

As usual,it is better to bypass the gov.uk website and look for chapter and verse from HMRC

www.hmrc.gov.uk/manuals/ihtmanual/IHTM14250.htm

I see Zylophone beat me to a link while I was typing

etwallace

Could I butt in here please and ask someone to confirm (or otherwise) that the tax exempt annual £3000 gift can be given to anyone, not just relatives. Thanks

Linton

It is not necessary to pay into a savings account - the money could for example be handed over as cash. The £3K gift allowance can be paid to anyone.

etwallace

Thanks. One more thing, can the annual gift limit be split into 12 monthly payments to be paid into an account like an income, thats up to 250 per month.

jamesd

It can be split. [STRIKE]Don't make the mistake of paying it regularly to a person on means tested benefits, who will have to declare it as income because of the regular nature.[/STRIKE]

Use caution with gifts to recipients of means tested benefits. While capital gifts are most likely to be problematic because they are likely to be treated as savings, regular payments might avoid this by being treated as income of a type that is disregarded for benefits calculations.

Don't just do gifts or income, check the specific situation of the person so that you do things in a way that is most beneficial to them.

etwallace

Are you sure about that jamesd, suppose it was paid in two or three lumps instead of 12, it would still be income. Is there a link for that please?

xylophone

http://ouchtoo.org/index.php?topic=3896.20;wap2

may be of interest but put your question on the benefits board?

etwallace

Ok, thanks for that.

jamesd

etwallace wrote: »

Are you sure about that jamesd, suppose it was paid in two or three lumps instead of 12, it would still be income. Is there a link for that please?

Check the rules for the specific situation. In a lot of cases income from regular gifts will be disregarded and it's a single gift into capital increasing savings that would be the bigger issue.

Since it's usually the other way around that's the problem I'm editing my original post to give a caution that's more likely to matter.