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What is meant by "gifts out of income" and "normal expenditure" in the IHT context?
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Keep_pedalling said: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.
especially clarifying first point.
no IHT forms to fill on death of first to die for probate?
wife’s 81 and not in too good a health.I’m 76, in good health.
bit too old for insurance policy I think, ? Premiums would be sky high.
no chance of gifting £325k + in seven years, ever.
income is £50k plus interest off £650k pa.
so assets going up all the time, want to gift to the two kids.
which one of us would be best to make gifts ? If any !
one off larger ones is better than from income ones you say. Correct?
I don’t intend to gift below £1m because might need care home fees. But want to gift the residue and most of the income
, I am the main earner.
wife is £8k pa, I am £45 k pa.+ interest off a/cs, mostly isas, both of us.
like I said earlier in my post, I could get knocked over by a bus tomorrow.😳
appreciate your advice, as all the others, very helpful, such a inexact topic.0 -
P.s the house is the factor.
£350k and £1m is reached.above is the residue, ain’t had it valued, but likely £400-£450k should be realistic, perhaps more, but they could crash, ready for one.
as I said, inexact topic!0 -
joesoap1264 said:Keep_pedalling said: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.
especially clarifying first point.
no IHT forms to fill on death of first to die for probate?
wife’s 81 and not in too good a health.I’m 76, in good health.
bit too old for insurance policy I think, ? Premiums would be sky high.
no chance of gifting £325k + in seven years, ever.
income is £50k plus interest off £650k pa.
so assets going up all the time, want to gift to the two kids.
which one of us would be best to make gifts ? If any !
one off larger ones is better than from income ones you say. Correct?
I don’t intend to gift below £1m because might need care home fees. But want to gift the residue and most of the income
, I am the main earner.
wife is £8k pa, I am £45 k pa.+ interest off a/cs, mostly isas, both of us.
like I said earlier in my post, I could get knocked over by a bus tomorrow.😳
appreciate your advice, as all the others, very helpful, such a inexact topic.
You are quite sensible to protect funds that may be needed for care which is exactly what we are doing. If your wife gifts you £160k and then you gift your children £200k you will both be left with £240k savings that could be used to cover care costs if needed and your joint net worth would be reduced to around £880k
if you have mirror wills leaving everything to each other and you survive 7 years there will be no IHT to pay on either death. If you don’t live another 7 years then there will still be no IHT to pay on the first death but there would be on the second (unless the second to die used some of the money reserved for care costs) but your children be no worse off than if you did nothing.
Going forward keep using your annual exemption to gift £3k each per year and if necessary you could could start to use you excess income to stop your joint assets going over £1M again, although I have a feeling that an increase in the NRB may come along before then.1 -
Keep_pedalling said:joesoap1264 said:Keep_pedalling said: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.
especially clarifying first point.
no IHT forms to fill on death of first to die for probate?
wife’s 81 and not in too good a health.I’m 76, in good health.
bit too old for insurance policy I think, ? Premiums would be sky high.
no chance of gifting £325k + in seven years, ever.
income is £50k plus interest off £650k pa.
so assets going up all the time, want to gift to the two kids.
which one of us would be best to make gifts ? If any !
one off larger ones is better than from income ones you say. Correct?
I don’t intend to gift below £1m because might need care home fees. But want to gift the residue and most of the income
, I am the main earner.
wife is £8k pa, I am £45 k pa.+ interest off a/cs, mostly isas, both of us.
like I said earlier in my post, I could get knocked over by a bus tomorrow.😳
appreciate your advice, as all the others, very helpful, such a inexact topic.
You are quite sensible to protect funds that may be needed for care which is exactly what we are doing. If your wife gifts you £160k and then you gift your children £200k you will both be left with £240k savings that could be used to cover care costs if needed and your joint net worth would be reduced to around £880k
if you have mirror wills leaving everything to each other and you survive 7 years there will be no IHT to pay on either death. If you don’t live another 7 years then there will still be no IHT to pay on the first death but there would be on the second (unless the second to die used some of the money reserved for care costs) but your children be no worse off than if you did nothing.
Going forward keep using your annual exemption to gift £3k each per year and if necessary you could could start to use you excess income to stop your joint assets going over £1M again, although I have a feeling that an increase in the NRB may come along before then.
you have said what I had intended to do, use gifts out of unused income.
we have mirror wills.
I think houses will come down, but ours will still command £350+
I also think he has to give way on “death tax” , because that’s all it is.
no increase in years of allowances.
BUT.
doubt he will be in that position, long enough,and t other one likely to reduce it!🤬
cheers👍
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Hi guys, just a query.
on the income and outgoings form, part of 403, it asks for insurance, in outgoings.
I presume this is life insurance, or am I wrong, car and house insurance?
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joesoap1264 said:Hi guys, just a query.
on the income and outgoings form, part of 403, it asks for insurance, in outgoings.
I presume this is life insurance, or am I wrong, car and house insurance?1 -
If unsure, in my spreadsheet, I put in 'other' but I list 'other' expenditure in a comment box. You can make this as detailed as you want in a spreadsheet. So I buy paintings from time to time. NOT household expenses - but an expenditure - maybe £600-£1000 so this goes in other.
Some - suchas gardening - not quite sure about - I could stop spending on the gardener any time so not an essential household expenditure.1 -
MarzipanCrumble said:If unsure, in my spreadsheet, I put in 'other' but I list 'other' expenditure in a comment box. You can make this as detailed as you want in a spreadsheet. So I buy paintings from time to time. NOT household expenses - but an expenditure - maybe £600-£1000 so this goes in other.
Some - suchas gardening - not quite sure about - I could stop spending on the gardener any time so not an essential household expenditure.
If your normal standard of living involves regular gardening services or a couple of decorative pictures a month, include them. At the other end of the scale, a complete landscaping exercise costing £10,000, or the purchase of a valuable painting as a one off investment, clearly do not represent expenditure on your usual standard of living.0 -
But 'Other' is part of the form - so is this supposed to include only really expensive items suchas an investment (painting, antique, purcases of shares)?
OK thanks
So not clear0 -
You don't buy one-off capital items out of income. That's why the mortgage payments are put in, but not the house cost itself, even if you paid a large amount of the cost out of savings.1
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