What is meant by "gifts out of income" and "normal expenditure" in the IHT context?

joesoap1264

MarzipanCrumble said:

Jeremy535897 said:

Just download it, or keep a spreadsheet that gives the same data.

I pointed this out much earlier in the thread.  Keep it annually and suggest you print it out so easily available by executors.

You did M, and I printed 6 spreads and 6 gifts .as soon as you said it
It will be hand filled, cannot do it on iPad, or can you?
cheers

joesoap1264

When I last looked at gifts, a couple of years ago, I started keeping records of income.etc, because I was under the impression IHT 203 applied on first death to get probate.
I see now this is not the case.
I even filled one in and left details how to do it for kids to look at.
Is IHT 203 required, it’s another vague area.?
everything is vague with Hmrc.
I can keep logs of things, but I know wife wouldn’t be capable if I go first.
gifts would cease then though.

Keep_pedalling

joesoap1264 said:

When I last looked at gifts, a couple of years ago, I started keeping records of income.etc, because I was under the impression IHT 203 applied on first death to get probate.
I see now this is not the case.
I even filled one in and left details how to do it for kids to look at.
Is IHT 203 required, it’s another vague area.?
everything is vague with Hmrc.
I can keep logs of things, but I know wife wouldn’t be capable if I go first.
gifts would cease then though.

I am sure you mean IHT403 not 203, but what makes you think it would not apply on the first death? 

joesoap1264

Keep_pedalling said:

joesoap1264 said:

When I last looked at gifts, a couple of years ago, I started keeping records of income.etc, because I was under the impression IHT 203 applied on first death to get probate.
I see now this is not the case.
I even filled one in and left details how to do it for kids to look at.
Is IHT 203 required, it’s another vague area.?
everything is vague with Hmrc.
I can keep logs of things, but I know wife wouldn’t be capable if I go first.
gifts would cease then though.

I am sure you mean IHT403 not 203, but what makes you think it would not apply on the first death? 

Thanks for reply K.
I must be getting confused , it was IHT 205 I looked at and filled in,(trial run), I think, and PA1P.
does 205 or 403,have to be submitted on the first death at all , to obtain probate, ?

joesoap1264

Do any IHT forms need to be submitted for the death of first spouse to obtain probate?

Keep_pedalling

joesoap1264 said:

Keep_pedalling said:

joesoap1264 said:

When I last looked at gifts, a couple of years ago, I started keeping records of income.etc, because I was under the impression IHT 203 applied on first death to get probate.
I see now this is not the case.
I even filled one in and left details how to do it for kids to look at.
Is IHT 203 required, it’s another vague area.?
everything is vague with Hmrc.
I can keep logs of things, but I know wife wouldn’t be capable if I go first.
gifts would cease then though.

I am sure you mean IHT403 not 203, but what makes you think it would not apply on the first death? 

Thanks for reply K.
I must be getting confused , it was IHT 205 I looked at and filled in,(trial run), I think, and PA1P.
does 205 or 403,have to be submitted on the first death at all , to obtain probate, ?

IHT 205 is now obsolete and IHT returns are not required for most exempt estates. However if your executor is required to claim exemptions for gifts from excess income to prevent those gifts eating into the transferable NRB , then they will have to to complete a full IHT return using IHT400 and all the appropriate supplementary forms including 403.

joesoap1264

Keep_pedalling said:

joesoap1264 said:

Keep_pedalling said:

joesoap1264 said:

When I last looked at gifts, a couple of years ago, I started keeping records of income.etc, because I was under the impression IHT 203 applied on first death to get probate.
I see now this is not the case.
I even filled one in and left details how to do it for kids to look at.
Is IHT 203 required, it’s another vague area.?
everything is vague with Hmrc.
I can keep logs of things, but I know wife wouldn’t be capable if I go first.
gifts would cease then though.

I am sure you mean IHT403 not 203, but what makes you think it would not apply on the first death? 

Thanks for reply K.
I must be getting confused , it was IHT 205 I looked at and filled in,(trial run), I think, and PA1P.
does 205 or 403,have to be submitted on the first death at all , to obtain probate, ?

IHT 205 is now obsolete and IHT returns are not required for most exempt estates. However if your executor is required to claim exemptions for gifts from excess income to prevent those gifts eating into the transferable NRB , then they will have to to complete a full IHT return using IHT400 and all the appropriate supplementary forms including 403.

Bit confused again, not hard for me🤬

joesoap1264

As everything is going to spouse, on first death, this will still apply?
I wrongly thought, as gifts were 50-50 from joint a/ c, IHT was not payable till death of second spouse.
so, any gifts given, over the £3k and £250 allowance from first to die , even if it’s from income, reduces the NRB of the donor, and has to be paid, under the seven year rule ?
the ( from income was to try and mitigate the 7 year rule).
heads you lose, tails you lose!

joesoap1264

Rollback! Beginning!
we have house .value circa £350- £450k.split 50-50.
wife has £400k in bank a/c,s
I have £280k in bank a/c,s
difference to use wife’s unused income tax allowance up, and I have married allowance.
If wife dies first, she has over £325NRB, does she pay IHT, on £125k ?
gifts seem to muddy the waters .

Keep_pedalling

joesoap1264 said:

Rollback! Beginning!
we have house .value circa £350- £450k.split 50-50.
wife has £400k in bank a/c,s
I have £280k in bank a/c,s
difference to use wife’s unused income tax allowance up, and I have married allowance.
If wife dies first, she has over £325NRB, does she pay IHT, on £125k ?
gifts seem to muddy the waters .

If you are leaving everything to each other then there will be no IHT to pay on the first death regardless of the size of your estate, unless either of your have given away more than your NRB (£325k) in the last 7 years.

With that level of assets the better option would be to make larger one off gifts as you already have have £1M of exemption s o you don’t need to lower your joint assets that much to get within that allowance. If you are both in good health you can easily cover any IHT that falls because of meeting an untimely end with a term life insurance  policy.