Help with IHT403 Gifts form

markval

I'm DIY'ing probate and IHT, using IHT400.
I've read all the forms, the guidance and the HMRC IHT 'Manual', but still not clear.

I'd appreciate some help on how to fill in the IHT403-Gifts.

How do you fill in p3, box 7, 'Gifts made within 7 years'? I've searched high and low for samples of how it should be done but find nothing.

Let's say I've got 2 gifts of £2,000 in a given year to deal with. I have the £3,000 'annual allowance' (no brought-forward; just the 3K).

Do I list e.g.
£2,000, using annual allowance to exempt £2,000, so net value £0
£2,000, using annual allowance to exempt £1,000, so net value £1,000

...or do I ignore the gift with is exempted to £0, and then simply declare the other one as £1,000 without mentioning exemptions?

Both result in a IHT liability of £1,000 but I suspect one is right and one is wrong!

Another question about 'Gifts from income'. Let's say the deceased has been paying a son £500 per month for the last 5 years to help with living costs. I know I have to fill in the last page, 'Gifts made as part of normal expenditure out of income', which is a TON of work to analyse years of bank statements in order to show there is surplus income to cover the gift.
But do I ALSO list that gift on p3, box 7, Gifts made within 7 years?
If so, do I write, e.g.
£6,000, Exemption=Gift from income, Exemption deducted £6,000, net value of gift £0?

Any help much appreciated.
Mark

relaxtwotribes

In applying for probate for my late mother I had to complete Form IHT403.  Due to the variety of gifts and complexity I completed a schedule using Excel following the format of page 3 and attached it to IHT403.  In essence, the way you suggest completing the form will work as this example shows.  There was a carry forward, but you get the idea:
Description        Type of Relief                 Value               Exemption              Net Value
2011/12
Insurance Pr.      Annual Exemption          £  600             £   600                    Nil
                                                                                         (c/fwd £2,400)
2012/13
Insurance Pr.      Annual Exemption          £1,200             £1,200                    Nil
Cash, Xmas        Annual Exemption          £6,000            £4,200                     £1,800
2013/14
Insurance Pr.      Gift out of income          £1,200             £1,200                    Nil
Cash, Xmas        Annual Exemption          £3,000            £3,000                   Nil
Cash, Regular    Gift out of income           £6,000            £6,000                     Nil
And so on for several years.
Some of the figures have been changed.  I did keep financial records deducted from bank statements which enabled me to complete Page 8 of IHT403 and spent quite some time going over those records.  For monthly regular gifts of £500 you are looking at a saving of £12,000 (£500*60*40%) so well worth the time.

markval

Thanks so much for that incredibly useful reply and concrete example. I will model my IHT403 on yours.

Thanks again and brgds.

Frogletina

I'm preparing my own excel list of gifts (capital, out of income, and small gifts) for my executors.

Althought I'm not in IHT territory at the moment, I could be in a few years time with the freezing of the IHT allowances, and depending on house prices and inflation.

WaywardDriver

Frogletina said:

I'm preparing my own excel list of gifts (capital, out of income, and small gifts) for my executors.

Althought I'm not in IHT territory at the moment, I could be in a few years time with the freezing of the IHT allowances, and depending on house prices and inflation.

Your executors will need more than that for IHT403. i.e. breakdown of income and expenditure into defined categories.

Frogletina

WaywardDriver said:

Frogletina said:

I'm preparing my own excel list of gifts (capital, out of income, and small gifts) for my executors.

Althought I'm not in IHT territory at the moment, I could be in a few years time with the freezing of the IHT allowances, and depending on house prices and inflation.

Your executors will need more than that for IHT403. i.e. breakdown of income and expenditure into defined categories.

I've got income and expenditure accounts as well for the last 7 years. I use Ynab and I run reports from that. 

These reports plus my gifts list should be sufficient for my executors.

I also have a list of utility companies, bank accounts, people to contact etc.

Dealing with a bereavement is painful enough, but trying to find information about these things, when so much is now done online, and little paperwork, is very difficult. 

Keep_pedalling

Frogletina said:

WaywardDriver said:

Frogletina said:

I'm preparing my own excel list of gifts (capital, out of income, and small gifts) for my executors.

Althought I'm not in IHT territory at the moment, I could be in a few years time with the freezing of the IHT allowances, and depending on house prices and inflation.

Your executors will need more than that for IHT403. i.e. breakdown of income and expenditure into defined categories.

I've got income and expenditure accounts as well for the last 7 years. I use Ynab and I run reports from that. 

These reports plus my gifts list should be sufficient for my executors.

I also have a list of utility companies, bank accounts, people to contact etc.

Dealing with a bereavement is painful enough, but trying to find information about these things, when so much is now done online, and little paperwork, is very difficult. 

Made even worse when lots of people are running multiple current accounts, and continually switching. 

Robert_McGeddon

Frogletina said:

WaywardDriver said:

Frogletina said:

I'm preparing my own excel list of gifts (capital, out of income, and small gifts) for my executors.

Althought I'm not in IHT territory at the moment, I could be in a few years time with the freezing of the IHT allowances, and depending on house prices and inflation.

Your executors will need more than that for IHT403. i.e. breakdown of income and expenditure into defined categories.

I've got income and expenditure accounts as well for the last 7 years. I use Ynab and I run reports from that. 

These reports plus my gifts list should be sufficient for my executors.

I also have a list of utility companies, bank accounts, people to contact etc.

Dealing with a bereavement is painful enough, but trying to find information about these things, when so much is now done online, and little paperwork, is very difficult. 

What a thoughtful approach to take - particularly if you're not yet subject to IHT.

abukco

Help! Advice needed with the dreaded IHT403 form. Just dealing with my Father's estate, unfortunately he died two months short of 30k being outside the 7 year exemption.

I have found out that 'Gifts out of Income' are separate to the 'Annual Allowance' and both can be used together The Annual Allowance is 3k per parent and can be made up to 6k each, if neither parent gifted this amount to the recipient the year before.

My question is, can I put down 12k exemption from both parents (6k + 6k) for the 30k, reducing it to 18k?

Mum passed away in 2018 and I didn't list any exemptions then as everything passed to Dad and they were down as 50% on the bank accounts, so the 30k passed to Dad's estate.

Do you think HMRC will go for the 12k reduction on the 30k, which is 7 years old?

If anyone can help I'd be grateful.

naedanger

abukco said:

Help! Advice needed with the dreaded IHT403 form. Just dealing with my Father's estate, unfortunately he died two months short of 30k being outside the 7 year exemption.

I have found out that 'Gifts out of Income' are separate to the 'Annual Allowance' and both can be used together The Annual Allowance is 3k per parent and can be made up to 6k each, if neither parent gifted this amount to the recipient the year before.

My question is, can I put down 12k exemption from both parents (6k + 6k) for the 30k, reducing it to 18k?

Mum passed away in 2018 and I didn't list any exemptions then as everything passed to Dad and they were down as 50% on the bank accounts, so the 30k passed to Dad's estate.

Do you think HMRC will go for the 12k reduction on the 30k, which is 7 years old?

If anyone can help I'd be grateful.

I think what you are proposing might look odd to HMRC. Is the reality really that of the £30k, £6k was from your mother and £24k was from your father?

I think this gift should benefit from taper relief so that rate of tax on it will be 8%. (It still means there would be a difference of £480 in the tax payable if you could somehow successfully argue that you can use both parents' annual allowances.)

Keep_pedalling

abukco said:

Help! Advice needed with the dreaded IHT403 form. Just dealing with my Father's estate, unfortunately he died two months short of 30k being outside the 7 year exemption.

I have found out that 'Gifts out of Income' are separate to the 'Annual Allowance' and both can be used together The Annual Allowance is 3k per parent and can be made up to 6k each, if neither parent gifted this amount to the recipient the year before.

My question is, can I put down 12k exemption from both parents (6k + 6k) for the 30k, reducing it to 18k?

Mum passed away in 2018 and I didn't list any exemptions then as everything passed to Dad and they were down as 50% on the bank accounts, so the 30k passed to Dad's estate.

Do you think HMRC will go for the 12k reduction on the 30k, which is 7 years old?

If anyone can help I'd be grateful.

Yes you can do that but your mother’s share of the gift will reduce her transferable NRB by £6k.