"Varying" winnings or gifts?

Sea_Shell

Is there any such mechanism, that would apply to gifts or winnings in a similar way that can be done for an inheritance (Deed of Variation), If, say, a lottery or premium bond win would push you into (or further into) IHT territory.

I've never heard it mentioned, so probably not, but I'm curious.

If not, is the answer to either not play/invest, or simply to have to rely on the 7 year rule, if you wanted to "pay it forward"?

Jeremy535897

In future, you could buy the lottery tickets or premium bonds in the donee's name, so the only gift is the original amount. Whilst most lottery tickets lose and are worthless, the trivial purchase amount may well fall within IHT exemptions.

Sea_Shell

Jeremy535897 said:

In future, you could buy the lottery tickets or premium bonds in the donee's name, so the only gift is the original amount. Whilst most lottery tickets lose and are worthless, the trivial purchase amount may well fall within IHT exemptions.

I can see how that would work.

However, in an inheritance situation, you have 2 years (from DoD) to make a decision on a DoV.   

I'm guessing you have no such "thinking time" if, say, a parent was the one who'd won and gifted you a substantial amount as an "early inheritance".

You could ask them to gift directly instead, but that could be awkward if it involves different sides of the family or other inter-family "issues".

Jeremy535897

A deed of variation is a specific action that may be taken on someone's death. It does not apply in other cases, because the parties are still alive and can put their wishes into effect (in your example, by giving the winnings). There is no way to rewrite for tax purposes what actually happened in the context of a straightforward intra vires lifetime gift by a donor with capacity.

Sea_Shell

As I thought then, there isn't.

I was just thinking out loud really, but thanks for clarifying.

So, in the meantime if DHs £20 worth of premium bonds win BIG, he can't ask NS&I to pay the winnings to someone else directly instead?!?

pphillips

Sea_Shell said:

As I thought then, there isn't.

I was just thinking out loud really, but thanks for clarifying.

So, in the meantime if DHs £20 worth of premium bonds win BIG, he can't ask NS&I to pay the winnings to someone else directly instead?!?

I don't think NSI pay winnings to third parties but if they did offer that service it would still be classed as a gift for IHT purposes. I think NSI do allow you to buy bonds for someone else but that person then owns the bonds and could then sell them if they wanted.

Sea_Shell

pphillips said:

Sea_Shell said:

As I thought then, there isn't.

I was just thinking out loud really, but thanks for clarifying.

So, in the meantime if DHs £20 worth of premium bonds win BIG, he can't ask NS&I to pay the winnings to someone else directly instead?!?

I don't think NSI pay winnings to third parties but if they did offer that service it would still be classed as a gift for IHT purposes. I think NSI do allow you to buy bonds for someone else but that person then owns the bonds and could then sell them if they wanted.

Which is fine if you want to gift the capital.   

Eg I might not want to gift, say, £10,000 each to 5 nieces and nephews NOW, but I might be happy to gift them from any big winnings!  Money I wouldn't have otherwise had.   

Jeremy535897

What you want to do is to give away only the rights to a certain amount of potential winnings or prizes, as opposed to the capital. You could create such a gift, but as you would have reserved a benefit, it would be ineffective for inheritance tax (and income tax for that matter).

zagfles

Sea_Shell said:

As I thought then, there isn't.

I was just thinking out loud really, but thanks for clarifying.

So, in the meantime if DHs £20 worth of premium bonds win BIG, he can't ask NS&I to pay the winnings to someone else directly instead?!?

£20 ?? Even if you meant £20k, the chance of a big win, enough to worry about IHT effect, is so miniscule it's not worth wasting any effort thinking about.

Sea_Shell

zagfles said:

Sea_Shell said:

As I thought then, there isn't.

I was just thinking out loud really, but thanks for clarifying.

So, in the meantime if DHs £20 worth of premium bonds win BIG, he can't ask NS&I to pay the winnings to someone else directly instead?!?

£20 ?? Even if you meant £20k, the chance of a big win, enough to worry about IHT effect, is so miniscule it's not worth wasting any effort thinking about.

Yep, £20, which he's had since about 1970!!!   They've been logged on line, but he still has the original paper bonds too.

Not won a bean in all that time...so he's due a big one!!! 😉😉😉😉

My question was more of a what if?   Not just for my sake but for us all, should we find ourselves in that lucky position.

sheramber

Yep, £20, which he's had since about 1970!!!   They've been logged on line, but he still has the original paper bonds too.

Not won a bean in all that time...so he's due a big one!!! 😉😉😉😉

My question was more of a what if?   Not just for my sake but for us all, should we find ourselves in that lucky position.

Not won a bean in all that time...so he's due a big one!!!
I hope you are correct and I can look forward to big win.
I have 2 x£1 bonds from 1959 that  have never won anything.