IHT - Surplus Income

peterken

hi

when determining someone's excess income and they have made major expenses, like fitting a new Kitchen. Do you have to treat the item as a normal annual expense item in that tax year or could you argue that this is a capital expense that came out of savings which would leave more income as excess?

Appreciate any comments.

thanks

Jeremy535897

It is a complex area. See https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231 et seq.
You look at whether there is sufficient excess income after "normal living expenses" (see 14255), so I think a new kitchen would not have to be considered.