Forever stuck on IHT403

JamieKendal

Good afternoon, apologies in advance for the long post.

I feel like I have been stuck on IHT403 for a very long time and I cannot for the life of me determine what I need to do. I don't know how to just state a value for 7 years worth of gifts without giving more detail. In context, the gifts are not large at all and are exempt, and nowhere near enough to put us over the IHT threshold. 

HMRC have already told me I should halve values from the joint account, leaving me to contend with transfers between £500 and £1100. As some of those years do not add up to £3000 does that mean I do not even include them?

1) If I receive a £3000 gift using the annual allowance, does that need to be mentioned, showing the exemption applied and the Net Value as £0? I'm happy to document it on the form if it's necessary. 

2) On page 7 for year 2023/24 I am going to detail my late mothers income/expenditure in order to detail gifts out of normal expenditure. That seems straightforward. 

3) My late mother was a special guardian for her grandson. My mother had been making regular savings payments to him from a joint account between 2014 and 2023 (£100 a month) as well as lump sum gifts from a joint account.

In the year my mother passed away she gave 3 x £100 payments to her grandson. Do each of these payments need to be written on a single line on page 3? As well as multiple gifts out of income to myself. I'm only considering putting them there as there was over £3000 worth of gifts in 2023/2024.

To avoid detailing years worth of regular payments as gifts out of income is it OK to lump them together as part of Annual Exemption? e.g. £1075 over 12 months?

4) I have created a spreadsheet detailing all gifts from my mother for the last 7 years. Only in 2023 does the value of gifts come to £3000 or above. I don't think all these gifts need to be on IHT403 for that reason. Would it be advisable to include a printout of the spreadsheet to show HMRC the information I have for the sake of transparency?

IHT403 is the last form I need to fill in and I really will appreciate some advice. I am going to call HMRC in the morning but it would be good if I went into that call with a better understanding. 

Thank you. 

Keep_pedalling

If they are gifts covered by her personal annual exemptions you don’t need to declare them. 

JamieKendal

Hi Keep_pedalling, 

Does that mean a gift of £3000 doesn't even need to be included on the form?

What should I do with Gifts out of Income? As I know that's a little different.

Do I include each of those on a single line on page 3?

Keep_pedalling

JamieKendal said:

Hi Keep_pedalling, 

Does that mean a gift of £3000 doesn't even need to be included on the form?

What should I do with Gifts out of Income? As I know that's a little different.

Do I include each of those on a single line on page 3?

Yes, you don’t include gifts from your annual exemption, or gifts to individuals who received £250 or less in total.

Gifts out of excess income are incredible difficult if the testator never kept good records of both the gifts and the expenditure, I am afraid there is no easy solution on that one apart from not claiming them. 

JamieKendal

At the moment this is what my spreadsheet looks like:

JamieKendal

Thanks Keep_Pedalling. I have all the financial records I need to cover gifts out of income. My mother was exceptional when it came to keeping records of everything. I'll exclude the annually exempt gifts of £3000 and the £250 birthday gifts as the recipient got more than that in total, and I'll just detail the gifts out of income even if the values are small. 

Can't wait to speak to HMRC in the morning! Yippee!

Keep_pedalling

None of those gifts covering the tax year up to April 2022 need to be declared as they all fall below the £3k annual allowance.1075

2022-2023 - Assuming the £20,000 went into the child’s account more than 7 years prior to it being cashed in, than that also does not need to be declared as it was in the child’s name not hers. The payment of £1,075 can also be ignored as that again was within her exemption..

2023-2024 - Here you have a carry forward of £1,925 from the previous tax year so her total exemption for this year is £4,925. As with the previous tax year I am assuming that the child’s account is not part of her estate. You are claiming that there was £2,050  gifted from excess income that year so that all goes on page 8, as as it is only for the current tax year it should not be to difficult for you to work though her bank statements to provide the figures required. 

That leaves other gifts of £10,500 of which £4,925 is covered by her annual exemption. Forget the birthday thing that is not a claimable exemption. Normal birthday gifts can be ignored but not if they are included in a large lump sum.

1st Aug - £7,500 annual exemption of £3000 + £1,950 c/o from 2022, net value £2,550
Sept      - £3000, no exemption, net value £3,000

Hope that helps.

JamieKendal

You, Sir, are a legend!

I hope you realise that the effort you put in here to help people is incredibly appreciated. Sitting here by myself in knots over this and you offer your help to a complete stranger and make all the difference. Thank you so much. 

PS: Yes, I already realised the birthdays needed removing.

Keep_pedalling

I made an error in the above post, the actual carry over from 2022 is £3000 not £1,950, because the that year’s gift was totally covered by the carry over from the previous year. Amended figures below.

1st Aug - £7,500 annual exemption of £3000 + £3,000 c/o from 2022, net value £1,500.
Sept      - £3000, no exemption, net value £3,000

JamieKendal

Ha - I wondered about that and was going to ask but didn't want to be a nuisance! Bravo, my friend, you really are great!

Silversue

I understood, from a solicitor's site, that of the many £250 'small gifts' you can give to separate individuals, if you gave £251 to any of them, then the whole £250 to that individual doesn't count as a 'small gift'. Is this right?