IHT403 (Gifts) - declaration of £250 gifts over and above £3k annual allowance?

Frogletina

Keep_pedalling said:

Frogletina said:

As these gifts were made regularly to the same children, did your mother have enough income in the years that they were gifted so that they could be declared as regular gifts out of income and not capital?

Regular gifts out of income are not subject to the £3000 a year limit.

It is not simply a matter of gifts from income it has to be excess income, and to show that the OP is going to have to provide detailed accounts of income and expenditure for all the years she did this. 

Making gifts from excess income it reduce your IHT liabilities is normally something that is planned in advance, with accounts kept to assist your executors. Applying it retrospectively is difficult and fraught dangers. I certainly would not be attempting it to save £250 on a large estate.

I think it was clear from what I said that I was referring to excess income.

I personally have complete records of my income and expenditure for the last 7 years. (It is purely coincidental to the 7 years required for capital gifts)

Examples of my gifts out of income are £200 to my great-grandchildren each year to go into their ISAs and I  gave £100 a month to my granddaughters when they were on maternity leave. 

I have given other money that doesn't follow a monthly or yearly pattern, but there is a pattern...eg money to younger grandchildren for savings - which varies by amount but is once or twice a year. This is usually under £250 a year but has on occasions exceeded this

I have read that gifts given three times shows as a regular pattern...from what I have read excess income from a previous year can be used in a current year. Only income over 2 years old not spent becomes capital.
 

Frogletina

Keep_pedalling said:

wolvoman said:

The lesson here - don’t leave a paper trail.

If there is any lesson to be learned here then it is not that. Leaving your executors in the dark just makes life very hard for them. 

I doubt many people keep accurate records...and I've been an executor twice so I know what difficulties there can be.  

However,

1) if someone draws out cash every month and gives some of it away, there is nothing to say that they did. 

2) Likewise, if the same person does a weekly shop and always buys extra for family members, or even does an online shop for delivery to someone else

3) or buys presents from Amazon alongside their own purchases.

4) I'm sure pocket money to children, plus birthday and Christmas presents come to more than £250 a year in many cases.

None of the above can accurately be checked - is it really that important? It has probably all come from income

I also think the tax free amounts for gifting are woefully out of date.


The £3000 limit has not increased since 1995 
The £250 limit has not increased since 1995
The wedding gift limits have not not increased since 1979 - but personally I think these are ok