Record of gifts given for IHT purposes

milla

Hi all

Would like some guidance on how to keep a record of gifts given for IHT purposes .

I am aware of the annual £3000 allowance and the £250 for birthdays etc . How would I record this ? What about any other gifts ?

How detailed does it need to be ? Do I need to record who received the gift or can I just say e.g £ 30 to Susan ? At what point is the amount trivial ?

Is anyone else keeping a record and could you give me some pointers please of how to record ?

Thanks

Yorkshireman99

milla wrote: »

Hi all

Would like some guidance on how to keep a record of gifts given for IHT purposes .

I am aware of the annual £3000 allowance and the £250 for birthdays etc . How would I record this ? What about any other gifts ?

How detailed does it need to be ? Do I need to record who received the gift or can I just say e.g £ 30 to Susan ? At what point is the amount trivial ?

Is anyone else keeping a record and could you give me some pointers please of how to record ?

Thanks

You need to keep a record of all significant gifts so your executors have the information for probate of who the gift is to and the date as well as the amount. Gifts out of income are exempt so just ignore them. Personally I don't record any amounts of less than £25 but it is up to you.

milla

Yorkshireman99 wrote: »

You need to keep a record of all significant gifts so your executors have the information for probate of who the gift is to and the date as well as the amount. Gifts out of income are exempt so just ignore them. Personally I don't record any amounts of less than £25 but it is up to you.

Thanks for your reply ...I am getting in a right tizz about this


By income ... do you mean out of current account / purse ? Sorry if that is a silly question . Supposing I sent someone some flowers that cost E.g. £ 45 ....do I really need to record that?

Yorkshireman99

milla wrote: »

Thanks for your reply ...I am getting in a right tizz about this


By income ... do you mean out of current account / purse ? Sorry if that is a silly question . Supposing I sent someone some flowers that cost E.g. £ 45 ....do I really need to record that?

Yes out of your current cash rather than from savings. Just use common sense about the amounts. remember that you have £3,000 per year to play with. I have been totting mine up for several years and with one exception have not got near the limit.

horshamdingle

According to the Money Advice Service, they suggest keeping a simple record of:


* Who you gave the money to


* When you gave it


* What you gave (cash or assets)


* How much it was for


I would also add a note for how it was given - eg Cheque number or date of online payment, and where it was paid from.


One of the executors jobs is to trawl through 7 years of bank statements, to look for any potential gifts.


Probably the best place to keep it would be with your will, otherwise in a key documents folder (as long as others are aware of where it is)

milla

horshamdingle wrote: »

According to the Money Advice Service, they suggest keeping a simple record of:


* Who you gave the money to


* When you gave it


* What you gave (cash or assets)


* How much it was for


I would also add a note for how it was given - eg Cheque number or date of online payment, and where it was paid from.


One of the executors jobs is to trawl through 7 years of bank statements, to look for any potential gifts.



Probably the best place to keep it would be with your will, otherwise in a key documents folder (as long as others are aware of where it is)

Thanks for your reply .

Having already disposed of £3000 allowance .......

If I then give someone £20 towards petrol for example or £30 for a new dress ....... surely this does not need to be recorded?


What I don't understand is how detailed it needs to be ....

Tuesday_Tenor

Will your estate be over or close to the IHT threshold?

If not, don't worry about the accuracy of such records.

My Dad did give us 2 daughters £10k each 2 years before he died. Duly declared on IHT form. Made no difference to tax position as estate was less than a third of the IHT threshold. But at least form was accurate.

No one ever kept a record of the other smaller gifts over the years as really not relevant to the tax position of such an estate.

What HMRC need to know is whether people are giving away 10s of thousands of pounds whether as a big gift, or lots of smaller ones, in order to avoid paying IHT.

---

If you are in/near the IHT bracket:

A point made earlier is that if you can afford to give the small gifts out of your annual income you don't need to bother about them in relation to declaring them as gifts on an IHT form

So, each year, overall, are you adding to your savings (not fully spending your annual income) or dipping into you saving ( spending more than your annual income).

If the former (or if your income matches your expenditure, including the gifts , exactly) then you don't need to bother to record them at all.

It's only if gifts are eating away at your capital assets that you need to keep a record of them. And it's only if those turn out to be greater than £3000 p.a. (and the other allowances, wedding gifts etc) that they would get recorded on the IHT form after your death.

So if your estate will be liable to IHT, and you can't afford all the gifts out of income, you should record them as other posts have indicated.
Strictly speaking, once you're looking at IHT liability, you should record ALL such gifts. £25 seems a sensible trigger to me.

Don't sweat the small stuff.
Who would ever know or care to investigate whether you gave a £20 gift of flowers to someone in 2014, or were buying flowers for yourself? Or whether you paid out of income or dipped into savings. Or paid out of income but dipped into savings for something else for yourself instead? It's not clearcut anyway!

milla

Thanks for your reply .

I will be in the IHT bracket .

I am arriving at the conclusion that this is a grey area indeed.

As you say , in the example , who knows whether it is a bunch of flowers for myself or for someone else . ..! Surely people are not expected to make a record every time they spend £25 or over of their own money ?

I am getting stressed by this as you can probably tell !

Madmel

My father gives us gifts each financial year. On the advice of his accountant, he types up a letter to each recipient stating the date, the amount and the reason for giving the gift. He keeps a copy, each recipient also keeps a copy.

He transfers the £3000 each year on 6th or 7th April, split between my sister and me. He also makes gifts of £250 to his siblings and grandchildren. When he has worked out his financial affairs for the previous tax year, he has also made extra payments, but these are detailed as "out of surplus income" on the letter, on the advice of the accountant.

Yorkshireman99

milla wrote: »

Thanks for your reply .

I will be in the IHT bracket .

I am arriving at the conclusion that this is a grey area indeed.

As you say , in the example , who knows whether it is a bunch of flowers for myself or for someone else . ..! Surely people are not expected to make a record every time they spend £25 or over of their own money ?

I am getting stressed by this as you can probably tell !

Sorry if I did not make it clear before. Small gifts such as flowers really don't count. Unless you are likely to hit the £3,000 in a year then I would suggest you just record gifts of say £200 or over. Just make sure your executor knows where to find the details. The provision is intended to catch those who are in a position to give thousands away every year not lesser mortals! No need to get stressed about it.

Keep_pedalling

I try to keep it simple, we gift our children £3000 each year, we have provided gifts on condition of marrage. All those are recorded on a spreadsheet together with any other major cash gifts over the limit.

We don't record birthday and Christmas gifts which are all realatively low value items.

I update the SS each year and keep a copy with our wills. As with many other people our banking is now totally on line and we don't keep paper copies any longer, so the executors are only going to have my spreadsheet to go on, although I believe the banks can provide those statements in the unlikely event that HMRC challenge the figures.