Gifting from Income

Hitting

If I use my IHT Annual £3k gift Allowance each year, but also make gifts above this, say a further £3k a year allocated to more than one Benificiary, but this further £3k like the other £3k is made in one go but at a different date each year, can this still be regarded as gifts from income?..or does it have to be regular in the form of regular monthly payments or regular annual payments made at the same date of year?

csgohan4

Quick info on the internet:

https://www.gov.uk/inheritance-tax/gifts

Keep_pedalling

The important thing about gifts from income is that it must be excess income, so does your income exceed your expenditure?

Linton

The rules for gifts from income are ill-defined. The requirement is that the gifts should be a normal part of your expenditure. If the executors and HMRC could not come to an agreement it would have to be decided by the courts.


I only know of one case that did go to court. The deceased was in the habit of calculating her income and expenditure at the end of each tax year and gifting any excess income. HMRC objected but the judge found against them on the basis that this was her normal behaviour.


I think, but IANAL, that your proposed gifting strategy would be acceptable as long as it generally happened each year.

Hitting

Keep_pedalling wrote: »

The important thing about gifts from income is that it must be excess income, so does your income exceed your expenditure?

Thank you ....I am aware of rules....and yes it does.

Hitting

Linton wrote: »

The rules for gifts from income are ill-defined. The requirement is that the gifts should be a normal part of your expenditure. If the executors and HMRC could not come to an agreement it would have to be decided by the courts.

I generally top up some JISAs once a year, but in excess of the £3k Ann.IHT allowance;...it is this excess I want to treat as coming from income, but this top up could be on a different month each year and a different amount.

What do you think?

getmore4less

Any pattern will normally do and there is the possibility of an element of carry over.

There are examples in the IHT manual.
Gifts start here
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14000
from income here
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14241

Keep_pedalling

Just make sure you keep good records for your executors.