Gifts out of income - how far back can you go?

davidwalters

I know all about giving out of income, and we keep exact records since we started this 4 years ago. However, looking again at the first year of this, ending 3 years ago, it seems there is more surplus than we took monthly. Can we go back to that year to take what was available? My mother wrote and signed a letter 4 years ago stating ahe wants to give out of excess income, so we've done it all correctly.HMRC are happy to go back 7 years if THEY want to take!  Our records are correct and exact, so we're not trying to cheat...but is there a time limit as to how far back you can correct it? I eventually got an answer on the phone from HMRC when I asked can we go back 3 years. He said yes but I wanted written proof of this. Waited, and the phone call was ended by an auto-voice! I just cant find it written anywhere. Thanks

Jeremy535897

What are you trying to do? There is no time limit as such. I suspect you will find the answer to your question in the IHT manual:
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231

davidwalters

I'm trying to see if it's ok to take more than what we have already taken, from 2-3 previous years, since I've worked out there was more 'surplus income' available. That's all. I suspect it is indeed time-limited.

sheramber

does this cover it

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14144

Grumpy_chap

davidwalters said:

I know all about giving out of income, and we keep exact records since we started this 4 years ago. However, looking again at the first year of this, ending 3 years ago, it seems there is more surplus than we took monthly. Can we go back to that year to take what was available? My mother wrote and signed a letter 4 years ago stating ahe wants to give out of excess income, so we've done it all correctly.

davidwalters said:

I'm trying to see if it's ok to take more than what we have already taken, from 2-3 previous years, since I've worked out there was more 'surplus income' available. That's all. I suspect it is indeed time-limited.

Are you saying you want to know how much your mother can gift to you?
The phrases "more surplus than we took" and "if it's OK to take more than what we have already taken" can be read in different ways.
Did your mother's letter 4 years ago say that she "wants to give out of excess income" or that she "wants to give all her excess income"?  There would (or could) be a big difference between the two.
If these are gifts that are being made by your mother to you, but with you acting as PoA, it is important to note that the duty of the PoA is to act in the best interests of your mother.  Gifts of as much as possible without incurring unnecessary tax liability may not be reflective of your mother's best interests.

Keep_pedalling

davidwalters said:

I'm trying to see if it's ok to take more than what we have already taken, from 2-3 previous years, since I've worked out there was more 'surplus income' available. That's all. I suspect it is indeed time-limited.

You say take, but shouldn’t your mother be the one making the decisions?

[Deleted User]

Would these additional lump sum payments satisfy the following?

1. They form a part of your 'normal expenditure' and are paid out on a regular basis.

davidwalters

Keep_pedalling said:

davidwalters said:

I'm trying to see if it's ok to take more than what we have already taken, from 2-3 previous years, since I've worked out there was more 'surplus income' available. That's all. I suspect it is indeed time-limited.

You say take, but shouldn’t your mother be the one making the decisions?

yes, she has wanted this, and is keen to reduce IHT as much as possible

davidwalters

[Deleted User] said:

Would these additional lump sum payments satisfy the following?

1. They form a part of your 'normal expenditure' and are paid out on a regular basis.

yes, they are excess to normal expenditure, as required. Regular is a vague word. It happens monthly, and we adjust as required. My question is different to this.

davidwalters

Grumpy_chap said:

davidwalters said:

I know all about giving out of income, and we keep exact records since we started this 4 years ago. However, looking again at the first year of this, ending 3 years ago, it seems there is more surplus than we took monthly. Can we go back to that year to take what was available? My mother wrote and signed a letter 4 years ago stating ahe wants to give out of excess income, so we've done it all correctly.

davidwalters said:

I'm trying to see if it's ok to take more than what we have already taken, from 2-3 previous years, since I've worked out there was more 'surplus income' available. That's all. I suspect it is indeed time-limited.

Are you saying you want to know how much your mother can gift to you?
The phrases "more surplus than we took" and "if it's OK to take more than what we have already taken" can be read in different ways.
Did your mother's letter 4 years ago say that she "wants to give out of excess income" or that she "wants to give all her excess income"?  There would (or could) be a big difference between the two.
If these are gifts that are being made by your mother to you, but with you acting as PoA, it is important to note that the duty of the PoA is to act in the best interests of your mother.  Gifts of as much as possible without incurring unnecessary tax liability may not be reflective of your mother's best interests.

She wants to give all excess income, to reduce IHT.

davidwalters

Grumpy_chap said:

davidwalters said:

I know all about giving out of income, and we keep exact records since we started this 4 years ago. However, looking again at the first year of this, ending 3 years ago, it seems there is more surplus than we took monthly. Can we go back to that year to take what was available? My mother wrote and signed a letter 4 years ago stating ahe wants to give out of excess income, so we've done it all correctly.

davidwalters said:

I'm trying to see if it's ok to take more than what we have already taken, from 2-3 previous years, since I've worked out there was more 'surplus income' available. That's all. I suspect it is indeed time-limited.

Are you saying you want to know how much your mother can gift to you?
The phrases "more surplus than we took" and "if it's OK to take more than what we have already taken" can be read in different ways.
Did your mother's letter 4 years ago say that she "wants to give out of excess income" or that she "wants to give all her excess income"?  There would (or could) be a big difference between the two.
If these are gifts that are being made by your mother to you, but with you acting as PoA, it is important to note that the duty of the PoA is to act in the best interests of your mother.  Gifts of as much as possible without incurring unnecessary tax liability may not be reflective of your mother's best interests.

It is for her best interests in that should she require to use more income herself, then we adjust the 'excess' accordingly. She lives very well, and is lucky to have a massive pension.