Savings for the grandchildren

Notepad_Phil

Nardy said:

Flugelhorn said:

makes no difference whether they are full or step grandchildren. Is your estate likely to be liable for IHT? Would you say that this is payable each year out of excess income rather than savings?

This is something I don't understand, excess money is surely savings, even if it's accruing very low interest in a current account or no interest in a cardboard box in the loft.

My understanding (though happy to be corrected) is that if you gifted from the interest paid by the savings then that would be okay if you weren't then having to dip into your savings or other assets to continue your normal lifestyle, but you can't just use the savings cash itself. Same goes if you have dividend income and want to use that to make gifts.

Obviously the above only matters if you are in IHT territory.
 

Albermarle

RedImp_2 said:

Maybe someone can clarify but why worry about keeping the gifts under the threshold?
The limits are there to prevent people circumventing IHT presumably.
I’m therefore presuming if your estate was liable for IHT then in theory this would be calculated taking into account over the limit payments but if you hadn’t made them then the calculation is still the same.  Hopefully you live loads longer and it falls out of your estate so much the better.

You are right, By gifting any amount you can not increase your liability for IHT, so you may as well give more ( if that is what you want to do) than these threshold gifts.
We see from many posts on here that it is widely misunderstood that if you give more you will become liable for more IHT.
Some even think that any large gifts will immediately have HMRC chasing after them for tax.