Gifts from income help

Yorkshireman99

Frankly absurd advice

TW1234

getmore4less wrote: »

Gifts from income do not have to be regular sums and can include saved up money you just need more context to establish boundaries of what is acceptable.
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Hmmm--would not all gifts (PETs) then be classed as saved up money and exempt?. Unspent surplus income is likely to be considered as capitalised after two years.

pphillips

getmore4less wrote: »

Gifts from income do not have to be regular sums and can include saved up money you just need more context to establish boundaries of what is acceptable.

It really is worth spending some time on Google and researching HMRC cases.

This is not good advice as the legislation clear says that gifts must be "made as part of the normal expenditure", I cannot see how anyone could interpret this as including savings.

getmore4less

TW1234 wrote: »

Hmmm--would not all gifts (PETs) then be classed as saved up money and exempt?. Unspent surplus income is likely to be considered as capitalised after two years.

No.

That's why you need to grasp the context and boundaries of what is acceptable.

The two years its capital and regular(which just needs a pattern or the intention to create one) are simplification of the broader scope of "normal expenditure.

It is possible to create normal expenditures that carry funds for more than the 2nd year.

There can also be normal expenditures that are not regular.

If you can't find an exemption for a gift you have a PET.

getmore4less

pphillips wrote: »

This is not good advice as the legislation clear says that gifts must be "made as part of the normal expenditure", I cannot see how anyone could interpret this as including savings.

You are allowed to save for things that are normal expenditure.

TW1234

getmore4less wrote: »

You are allowed to save for things that are normal expenditure.

For how long could you save up to give the accumulated savings as an exempt gift, and if it were a "once in a lifetime" gift, would you consider it to be regular?
Let's keep it realistically simple

pphillips

Here is a excerpt from the Inheritance Tax Manual:

"Lifetime transfers: conditions for normal out of income exemption: normal expenditure
The dictionary definition of ‘normal’ includes standard, regular, typical, habitual or usual. For the purpose of this exemption, ‘normal’ means normal for the transferor and not for the average person. In most cases, it will be clear whether or not there is a pattern of giving, but it is not always that simple.

It is possible that a number of gifts made by one person may not qualify. It is also possible for a single gift to qualify if it is or is intended to be the first of a pattern and there is evidence of this. You will need to analyse all the facts in cases of doubt to see if a pattern can be found.

Factors to take into account in looking at any pattern of gifts include the frequency and amounts, the nature of the gifts, the identity of the donees and the reasons for the gifts. "

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14241

Yorkshireman99

pphillips wrote: »

Here is a excerpt from the Inheritance Tax Manual:

"Lifetime transfers: conditions for normal out of income exemption: normal expenditure
The dictionary definition of ‘normal’ includes standard, regular, typical, habitual or usual. For the purpose of this exemption, ‘normal’ means normal for the transferor and not for the average person. In most cases, it will be clear whether or not there is a pattern of giving, but it is not always that simple.

It is possible that a number of gifts made by one person may not qualify. It is also possible for a single gift to qualify if it is or is intended to be the first of a pattern and there is evidence of this. You will need to analyse all the facts in cases of doubt to see if a pattern can be found.

Factors to take into account in looking at any pattern of gifts include the frequency and amounts, the nature of the gifts, the identity of the donees and the reasons for the gifts. "

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14241

All very well but a potential disaster zone for a novice. The OP MUST get professional advice.

Boleyn19

Yorkshireman99 wrote: »

Given the amount of money likely to be involved trying to DIY it based on what unknown posters say is false economy. You really need some professional advice on your financial affairs as a whole not just this aspect. Those who you can DIY it are simply wrong. You can’t afford to take the advice from this forum.

Certainly, I wanted to get the bare bones of what might be possible first. I always try and educate myself before bringing in a professional.

getmore4less

Great you have the sense to do your own research
There are a lot of resources and many will conflict or have differences in interpretation as will the advice you pay for.

Read as much as you can there is a lot out there,
HMRC manual is a underutilised resource.

Example of 3 year accumulated income.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14251
A qualification on deciding normal
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14255


There are others that help scope the boundaries of what is acceptable.

There will come a point you can out your situation under scrutiny of a suitable professional.