Gifts from savings account

GingerCuddy

I have a small low interest savings account into which I place a considerable portion of my pension each month from holidays etc, this does not affect my lifestyle. I never have more than about £10000 in it. If I gift my son £5000 from that account is it still classed as coming from my income or does the fact that it's coming from savings class it as an asset? 

flaneurs_lobster

Not answering your question but how low is "low interest"?

£10K could be earning >£450 a year in an easy access account. 

GingerCuddy

1.45% I use it like a piggy bank

eskbanker

GingerCuddy said:

I have a small low interest savings account into which I place a considerable portion of my pension each month from holidays etc, this does not affect my lifestyle. I never have more than about £10000 in it. If I gift my son £5000 from that account is it still classed as coming from my income or does the fact that it's coming from savings class it as an asset? 

Assuming your question relates to the IHT rules on gifting from regular income, the test is whether the gift is "made as part of the normal expenditure of the transferor", and is often referred to as 'regular', rather than a one-off lump sum, but there's more detail on interpretation at https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14243

You must test the whether a gift is ‘normal’ by considering all the relevant factors. These will include the frequency and amount, the nature of the gifts, the identity of those who received them and the reasons for the gifts.

Frequency

Normal does not necessarily mean regular or annual although gifts made on a regular basis are more likely to meet the normality test. In many cases averaging the yearly amount of the transferor’s gifts of a particular type will help to form a fair opinion.

i.e. it would be more likely to be assessed as normal expenditure for IHT purposes if you gifted, say, £200 per month or £2,500 a year, or whatever, rather than a lump sum like you suggested.

Keep_pedalling

Gifting from income is only really relevant if your estate is likely to be subject to IHT. If you made no gifts in the last financial year then the £5k is within your annual £3k exemption.