Gifts from Income

Hitting

Thank you,for your comments,which I take on board….i probably misunderstand the options…Having completed a test run of the Govs. IHT Calculator which indicates that no IHT would be payable,I assumed under that position IHT 400was not required!, and the alternative was IHT 205 ..in fact I believe this latter form is no longer required…. 

In my case what becomes the deciding factor in using IHT400?

Hitting

Hitting said:

Thank you,for your comments,which I take on board….i probably misunderstand the options…Having completed a test run of the Govs. IHT Calculator which indicates that no IHT would be payable,I assumed under that position IHT 400was not required!, and the alternative was IHT 205 ..in fact I believe this latter form is no longer required…. 

In my case what becomes the deciding factor in using IHT400?

Is it IHT400 because of making GFI?

Hitting

[Deleted User] said:

Hitting said:

Hitting said:

Thank you,for your comments,which I take on board….i probably misunderstand the options…Having completed a test run of the Govs. IHT Calculator which indicates that no IHT would be payable,I assumed under that position IHT 400was not required!, and the alternative was IHT 205 ..in fact I believe this latter form is no longer required…. 

In my case what becomes the deciding factor in using IHT400?

Is it IHT400 because of making GFI?

See the first link I posted. It says it there.

Sorry I can’t see it!….all I see is that by ‘all assets going to spouse’,and less than £3m it is an excepted estate with o reference to IHT400,…and probate could be applied for online….

Hitting

Which lines are you referring to:

What counts as an excepted estate

An estate is usually an excepted estate if any of the following apply:

• its value is below the current Inheritance Tax threshold
• the estate is worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died first
• the deceased left everything to a spouse or civil partner living in the UK or to a qualifying charity and the estate is worth less than £3 million (search the charity register for registered UK charities)
• the deceased was living permanently outside the UK (a ‘foreign domiciliary’) when they died and the value of their UK assets is under £150,000

Bookworm105

Hitting said:

Which lines are you referring to:

What counts as an excepted estate

An estate is usually an excepted estate if any of the following apply:

• its value is below the current Inheritance Tax threshold
• the estate is worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died first
• the deceased left everything to a spouse or civil partner living in the UK or to a qualifying charity and the estate is worth less than £3 million (search the charity register for registered UK charities)
• the deceased was living permanently outside the UK (a ‘foreign domiciliary’) when they died and the value of their UK assets is under £150,000

You said: IHT Calculator which indicates that no IHT would be payable,

So, as mentioned several times, if the estate is below IHT threshold then IHT (and all forms associated with it) is irrelevant 
2 lines up brings you to...

• its value is below the current Inheritance Tax threshold

Hitting

Is the value of the estate different from what the estate is worth?

Hitting

[Deleted User] said:

Bookworm105 said:

Hitting said:

Which lines are you referring to:

What counts as an excepted estate

An estate is usually an excepted estate if any of the following apply:

• its value is below the current Inheritance Tax threshold
• the estate is worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died first
• the deceased left everything to a spouse or civil partner living in the UK or to a qualifying charity and the estate is worth less than £3 million (search the charity register for registered UK charities)
• the deceased was living permanently outside the UK (a ‘foreign domiciliary’) when they died and the value of their UK assets is under £150,000

You said: IHT Calculator which indicates that no IHT would be payable,

So, as mentioned several times, if the estate is below IHT threshold then IHT (and all forms associated with it) is irrelevant 
2 lines up brings you to...

• its value is below the current Inheritance Tax threshold

No, that's not what I am saying.  I am saying that:

1. IHT205 is no longer relevant.

2. The IHT400 form (and hence IHT403) can be relevant even if no IHT is due.  For example, if you gave away £40,000 per year as part of your normal expenditure out of income in the previous seven years.  The link I set out earlier (https://www.gov.uk/valuing-estate-of-someone-who-died/check-type-of-estate) says:

You’ll need to send full details of the estate, even if no tax is due, if the person who died:

• gave away over £250,000 in the 7 years before they died

  
  

Thanks ..but I’m no where near to that!…..£250,000!

Hitting

Hitting said:

[Deleted User] said:

Bookworm105 said:

Hitting said:

Which lines are you referring to:

What counts as an excepted estate

An estate is usually an excepted estate if any of the following apply:

• its value is below the current Inheritance Tax threshold
• the estate is worth £650,000 or less and any unused threshold is being transferred from a spouse or civil partner who died first
• the deceased left everything to a spouse or civil partner living in the UK or to a qualifying charity and the estate is worth less than £3 million (search the charity register for registered UK charities)
• the deceased was living permanently outside the UK (a ‘foreign domiciliary’) when they died and the value of their UK assets is under £150,000

You said: IHT Calculator which indicates that no IHT would be payable,

So, as mentioned several times, if the estate is below IHT threshold then IHT (and all forms associated with it) is irrelevant 
2 lines up brings you to...

• its value is below the current Inheritance Tax threshold

No, that's not what I am saying.  I am saying that:

1. IHT205 is no longer relevant.

2. The IHT400 form (and hence IHT403) can be relevant even if no IHT is due.  For example, if you gave away £40,000 per year as part of your normal expenditure out of income in the previous seven years.  The link I set out earlier (https://www.gov.uk/valuing-estate-of-someone-who-died/check-type-of-estate) says:

You’ll need to send full details of the estate, even if no tax is due, if the person who died:

• gave away over £250,000 in the 7 years before they died

  
  

Thanks ..but I’m no where near to that!…..£250,000!

Sorry to prolong this thread,…but I think I’m missing something here!..If I’ve convinced myself that I would not be paying IHT,and I meet the other criteria mentioned in previous comments, such that I would be completing IHT205,or its alternative, not IHT400, when would I use IHT403.?…

Do I just ignore the fact that I’ve made gifts from income and know these to be exempt as per rules?,,when do I need to prove that I meet the exempt criteria?,..and to whom?

mybestattempt

You won't have to prove anything, but you need to ensure you leave the records of the gifts for your executor.

Your executor will submit the required information about your exempt (or otherwise) estate after you pass away, 

If, however, HMRC decide to investigate, then the detailed records you have kept of the gifts you have made, along with supporting documents (bank statements etc) can be provided by your executor to HMRC to prove the estate is exempt (or the correct IHT has been calculated) by your executor.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm09022

Hitting

, 

You won't have to prove anything, but you need to ensure you leave the records of the gifts for your executor.

Your executor will submit the required information about your exempt (or otherwise) estate after you pass away, 

Would the executor volunteer the initial info to HMRC on form IHT403,..I can’t see where a HMRC request is made to submit Gifts from Income,..apart from when completing IHT400,which is not required in this case!…

Unless because of GFI, IHT400 must be used..