Documentation for making an IHT exempt gift

gwernybwch

Hi all,

My mum wants to make a £3,000 each gift to both of her grandchildren and has asked me to help her to do it.

She didn't use any of her IHT annual exemption in the last tax year.

I have suggested that she does a bank transfer to their accounts and do a signed and dated letter saying something like "Dear..., I am today making you a gift of £3,000 from my bank account with X Bank out of my natural love and affection for you. You may do with it as you wish, but I am sure you will use it wisely. Love Grandma"

We take a photocopy of the letter / card.

Do you think that I am on the right lines? Is there anything that we need to do now to show that a portion of the money is a IHT annual exemption for the previous tax year? And to generally make it easier to prove that it was an exempt gift?

Thanks in advance for any replies.

Jeremy535897

It is the executors that have to sort this out, so if the estate is likely to be liable to inheritance tax, a simple spreadsheet showing gifts made (date, amount, recipient) and exemptions applicable is a good idea.

Keep_pedalling

As these gifts are within her annual exemption she does not need to document these gifts at all. Her executors will not have to declare them if she dies within 7 years. If she is planning on making further gifts beyond her exemptions then she should simply keep a record of them with her will to make life simple for her executors.