Income, Expenditure and Gifting from Excess Income

MarkCarnage

Keep_pedalling said:

SVaz said:

I can’t believe people are going to these ridiculous lengths.   Take £200 ( or whatever) a week in cash out, give it away and nobody will ever know what it’s been used for,  you could be spending it at the bookies or on fine wine for all anyone knows. 

No wonder they want us to stop using cash. 

The recipient can use the cash for their weekly shop etc. and their own money stays in the bank.

Because most of us are honest and don’t want to leave our executors in a position of committing fraud when there are legal ways of achieving the same end. 

This seems rather dramatic to assume that an executor is committing fraud when they would reasonably assume this was just spending money. Not sure how HMRC would ever prove otherwise even if they got involved in such detail. Using the original analogy further, I could spend it on fine wine, and gift it instead of just drinking it, and who's to know? 

Notepad_Phil

MarkCarnage said:

Keep_pedalling said:

SVaz said:

I can’t believe people are going to these ridiculous lengths.   Take £200 ( or whatever) a week in cash out, give it away and nobody will ever know what it’s been used for,  you could be spending it at the bookies or on fine wine for all anyone knows. 

No wonder they want us to stop using cash. 

The recipient can use the cash for their weekly shop etc. and their own money stays in the bank.

Because most of us are honest and don’t want to leave our executors in a position of committing fraud when there are legal ways of achieving the same end. 

This seems rather dramatic to assume that an executor is committing fraud when they would reasonably assume this was just spending money. ...

Madeinireland101 said:

I think what I’m saying is that surely the executor in that position will simple think it must have been used for normal expenses in some way. I presume they wouldn’t have to default to assuming a gift if there was no other documentation?

Both might hold where the executor is some third party who has no knowledge of the transaction, but for most wills I would assume that the executor is a member of the family and so is likely to have full knowledge if someone has been regularly taking cash out and using it to gift money to other people in the family.

poseidon1

poseidon1 said:

EnglishMohican said:

Thank you both - forgive me if I check my understanding of your answers by putting them in my own words and adding a bit from other sources.

Firstly, I am not trying to be over-clever and find loopholes. I am trying to make it easy for my executors by sticking to the straight and narrow and not gifting anything over what they can genuinely show is excess income. Ideally to make sure the records are easily available to demonstrate that.

Some things are clear, my pension is income, my food bill is expenditure. Both happen every month so they are simple.

HMRC mention averaging over a number of years - which seems reasonable. One year of heavy expenditure does not mean that gifting has to stop providing that over a number of years, the total expenditure can be shown to be less than the total income. The good years can cover the bad one. I guess that a follow up is that the year after the bad one needs to look hopeful as a normal expenditure year, that would help a forward looking justification immensely.

Where the extra money comes from (Cash ISA or Selling shares) is not important as long as that cash or those shares can reasonably be shown to be the result of the last "something" years  of income.

And if that heavy expenditure is not caused by something that I do in a pattern (two yearly, three yearly, whatever) it does not count in any case - as it is not normal.

Not a mention of capital in that! Have I got it about right now?

Anyone contemplating instigating a gifts out of income iht mitigation strategy should first take a  look at form IHT 403 and the gifts out of income schedule at page 8.  This gives an indication of the level of granular detail expected of  executors to demonstrate ( to HMRCs satisfaction) that excess income was indeed available  for each year of the purported gifts. 

 It is recommended that if anyone is serious about the exemption being invoked by their executors on eventual death, they complete each year a detailed income and expenditure schedule for their executors' assistance.

It is apparent from the queries raised by OPs on this subject, that there is often a vague understanding of the distinction between capital and income in determining excess income on a year to year basis. In this regard, OPs are  directed to HMRCs internal manuals, a link to part of the manual is shown below, and scrolling backwards and forwards from that page will give a more complete understanding of the hoops executors will need to jump through in successfully claiming the exemption.


https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14250


OPs should be aware that although income in the IHT legislation is not specifically defined, it is to be determined by HMRC officers  ' in accordance with normal accountancy rules'.

 If you are not accountancy trained, you are already at a disadvantage here.  As an example the 5% withdrawal facility from investment bonds is often characterised as income by insurance companies. It is not, its a return of your original capital. However, contrast this with pensioners taking regular UFPLSs from their SIPP. One might assume the element related to tax free cash should not be considered income, but apparently the entirety of the payment is income for the purposes of the exemption.

 Also take a look at the annuities heading in the HMRC manual link above. In the case of purchased life annuities ( ie, purchased from your own capital rather than from accumulated pension funds), the return of  capital element is not income for the purposes of the exemption.

What of ISA income which has not been distributed to the investor in the year, is that to be considered available income in subsequent years in ascertaining excess income? Well HMRC concede that although there are no hard and fast rules,  in the absence of evidence  to the contrary they  rather arbitrarily state that in general, unspent income becomes capital after two years.

The above examples are indicative of the sort of things a trained tax accountant should know if advising a client, but would the ordinary lay person be cognizant of these nuances in attempting DIY planning of their own?

In summary, in drawing attention to the schedule to IHT403, and HMRC's extensive guidance manuals on the subject,  OPs should acquaint themselves with the challenges their executors may face in proving the validity of  gifts out of excess income claims, and provide them with coherent records to do so. This is especially the case where OPs may also wish to utilise any of the various other capital gifts exemptions in a particular year, such as PETs and the £3,000 gifts  exemptions.

Just a bit more background to my thoughts on this matter.

I have no experience of people attempting to secure this exemption on a DIY basis. 

Prior to my retirement,  my firm routinely reccomended the availability of this exemption to clients who typically had high 6 figure incomes pre and post retirement and on whose behalf we prepare and submit their tax returns. With that granular insight into their income and capital affairs and indepth knowledge of HMRC criteria for acceptance of the relief, we then devise the annual paper trail of necessary evidence for those clients inclined to utilise the exemption.

Typically those clients are minded to make 5 figure annual gifts out of income, in addition to substantial capital gifts ( requiring 7 year survival) so a coherent water tight paper trail is necessary to ensure their objectives are met.

To that end, we would  eventually compile the submissions for the purposes of the IHT 403  declarations on behalf of the executors. 

The point being made is in general, the exemption is neither well known or utilised by those in a position to benefit from it. The professional accountancy and legal firms who have the HNWI client base who can benefit, propose and implement the appropriate strategies and supporting evidence to ensure HMRC's ultimate acceptance on their behalf.

For those lower down the income/wealth scale now considering implementing the exemption on a DIY basis , spare a thought  for your executors who will have no knowledge of HMRC's rules and criteria and may not be possessed of personal insight of your income/expenditure/capital to launch a convincing claim on your estate's behalf. You, therefore, during your lifetime are trying to replicate  (as best you can)  the kind of cohesive papertrail prepared on behalf of  professionally advised persons.    

 Bear in mind the whole ethos and complexity  of original inheritance tax/ death duty legislation  (as well as case law pertaining thereto ) was built on the edifice of taxing a very small  select group of the population, who typically would have accountants/lawyers  assisting and navigating these matters on their behalf. 

With the significant rise in house prices over the last 30/40 years , and the shrinking ( by default ) of the nil rate band ( unchanged for 14 years!) a broader mass affluent  population has emerged who are not routinely professionally advised. 

Other than the increase of the nil rate band from the original 1987 £71k level to £325k currently , the inherent complexity of the Inheritance tax system has not been adjusted for this changed demographic. So blithely assuming HMRC will take an understanding 'commonsense' stance when addressing this exemption claim from estates which are not professionally advised and where the deceased made little effort to provide the executors with acceptable evidence, I would suggest would be a mistake. 

Perhaps anyone who has been the executor of an estate, claiming this exemption without the benefit of professional intervention could relate their experiences in this regard?

Sarahspangles

Having been involved in unravelling muddles with two estates, I think it’s worth considering what happens when our capacity to take decisions and maintain records is fading. Having LPAs in place is the first step, the next is actually using them. 

Linton

poseidon1 said:

poseidon1 said:

EnglishMohican said:

Thank you both - forgive me if I check my understanding of your answers by putting them in my own words and adding a bit from other sources.

Firstly, I am not trying to be over-clever and find loopholes. I am trying to make it easy for my executors by sticking to the straight and narrow and not gifting anything over what they can genuinely show is excess income. Ideally to make sure the records are easily available to demonstrate that.

Some things are clear, my pension is income, my food bill is expenditure. Both happen every month so they are simple.

HMRC mention averaging over a number of years - which seems reasonable. One year of heavy expenditure does not mean that gifting has to stop providing that over a number of years, the total expenditure can be shown to be less than the total income. The good years can cover the bad one. I guess that a follow up is that the year after the bad one needs to look hopeful as a normal expenditure year, that would help a forward looking justification immensely.

Where the extra money comes from (Cash ISA or Selling shares) is not important as long as that cash or those shares can reasonably be shown to be the result of the last "something" years  of income.

And if that heavy expenditure is not caused by something that I do in a pattern (two yearly, three yearly, whatever) it does not count in any case - as it is not normal.

Not a mention of capital in that! Have I got it about right now?

Anyone contemplating instigating a gifts out of income iht mitigation strategy should first take a  look at form IHT 403 and the gifts out of income schedule at page 8.  This gives an indication of the level of granular detail expected of  executors to demonstrate ( to HMRCs satisfaction) that excess income was indeed available  for each year of the purported gifts. 

 It is recommended that if anyone is serious about the exemption being invoked by their executors on eventual death, they complete each year a detailed income and expenditure schedule for their executors' assistance.

It is apparent from the queries raised by OPs on this subject, that there is often a vague understanding of the distinction between capital and income in determining excess income on a year to year basis. In this regard, OPs are  directed to HMRCs internal manuals, a link to part of the manual is shown below, and scrolling backwards and forwards from that page will give a more complete understanding of the hoops executors will need to jump through in successfully claiming the exemption.


https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14250


OPs should be aware that although income in the IHT legislation is not specifically defined, it is to be determined by HMRC officers  ' in accordance with normal accountancy rules'.

 If you are not accountancy trained, you are already at a disadvantage here.  As an example the 5% withdrawal facility from investment bonds is often characterised as income by insurance companies. It is not, its a return of your original capital. However, contrast this with pensioners taking regular UFPLSs from their SIPP. One might assume the element related to tax free cash should not be considered income, but apparently the entirety of the payment is income for the purposes of the exemption.

 Also take a look at the annuities heading in the HMRC manual link above. In the case of purchased life annuities ( ie, purchased from your own capital rather than from accumulated pension funds), the return of  capital element is not income for the purposes of the exemption.

What of ISA income which has not been distributed to the investor in the year, is that to be considered available income in subsequent years in ascertaining excess income? Well HMRC concede that although there are no hard and fast rules,  in the absence of evidence  to the contrary they  rather arbitrarily state that in general, unspent income becomes capital after two years.

The above examples are indicative of the sort of things a trained tax accountant should know if advising a client, but would the ordinary lay person be cognizant of these nuances in attempting DIY planning of their own?

In summary, in drawing attention to the schedule to IHT403, and HMRC's extensive guidance manuals on the subject,  OPs should acquaint themselves with the challenges their executors may face in proving the validity of  gifts out of excess income claims, and provide them with coherent records to do so. This is especially the case where OPs may also wish to utilise any of the various other capital gifts exemptions in a particular year, such as PETs and the £3,000 gifts  exemptions.

Just a bit more background to my thoughts on this matter.

I have no experience of people attempting to secure this exemption on a DIY basis. 

Prior to my retirement,  my firm routinely reccomended the availability of this exemption to clients who typically had high 6 figure incomes pre and post retirement and on whose behalf we prepare and submit their tax returns. With that granular insight into their income and capital affairs and indepth knowledge of HMRC criteria for acceptance of the relief, we then devise the annual paper trail of necessary evidence for those clients inclined to utilise the exemption.

Typically those clients are minded to make 5 figure annual gifts out of income, in addition to substantial capital gifts ( requiring 7 year survival) so a coherent water tight paper trail is necessary to ensure their objectives are met.

To that end, we would  eventually compile the submissions for the purposes of the IHT 403  declarations on behalf of the executors. 

The point being made is in general, the exemption is neither well known or utilised by those in a position to benefit from it. The professional accountancy and legal firms who have the HNWI client base who can benefit, propose and implement the appropriate strategies and supporting evidence to ensure HMRC's ultimate acceptance on their behalf.

For those lower down the income/wealth scale now considering implementing the exemption on a DIY basis , spare a thought  for your executors who will have no knowledge of HMRC's rules and criteria and may not be possessed of personal insight of your income/expenditure/capital to launch a convincing claim on your estate's behalf. You, therefore, during your lifetime are trying to replicate  (as best you can)  the kind of cohesive papertrail prepared on behalf of  professionally advised persons.    

 Bear in mind the whole ethos and complexity  of original inheritance tax/ death duty legislation  (as well as case law pertaining thereto ) was built on the edifice of taxing a very small  select group of the population, who typically would have accountants/lawyers  assisting and navigating these matters on their behalf. 

With the significant rise in house prices over the last 30/40 years , and the shrinking ( by default ) of the nil rate band ( unchanged for 14 years!) a broader mass affluent  population has emerged who are not routinely professionally advised. 

Other than the increase of the nil rate band from the original 1987 £71k level to £325k currently , the inherent complexity of the Inheritance tax system has not been adjusted for this changed demographic. So blithely assuming HMRC will take an understanding 'commonsense' stance when addressing this exemption claim from estates which are not professionally advised and where the deceased made little effort to provide the executors with acceptable evidence, I would suggest would be a mistake. 

Perhaps anyone who has been the executor of an estate, claiming this exemption without the benefit of professional intervention could relate their experiences in this regard?

I successfully claimed >>£200K of gifts from income with over 500 relevent transactions. There was no professional involved in calculating the data and completing the form.  HMRC accepted the numbers without argument, perhaps because they did not want to wade through dozens of pages of annotated bank statements and spreadsheet results. 

It was pretty straightforward with no need for smoke and mirrors or dubious categorisation since the deceased had a very large annuity way beyond his normal expenditure  and lived well into his 90s. I was greatly helped by him having prepared a summary of income, expenditure and gifts at the end of each year..

poseidon1

Linton said:

poseidon1 said:

poseidon1 said:

EnglishMohican said:

Thank you both - forgive me if I check my understanding of your answers by putting them in my own words and adding a bit from other sources.

Firstly, I am not trying to be over-clever and find loopholes. I am trying to make it easy for my executors by sticking to the straight and narrow and not gifting anything over what they can genuinely show is excess income. Ideally to make sure the records are easily available to demonstrate that.

Some things are clear, my pension is income, my food bill is expenditure. Both happen every month so they are simple.

HMRC mention averaging over a number of years - which seems reasonable. One year of heavy expenditure does not mean that gifting has to stop providing that over a number of years, the total expenditure can be shown to be less than the total income. The good years can cover the bad one. I guess that a follow up is that the year after the bad one needs to look hopeful as a normal expenditure year, that would help a forward looking justification immensely.

Where the extra money comes from (Cash ISA or Selling shares) is not important as long as that cash or those shares can reasonably be shown to be the result of the last "something" years  of income.

And if that heavy expenditure is not caused by something that I do in a pattern (two yearly, three yearly, whatever) it does not count in any case - as it is not normal.

Not a mention of capital in that! Have I got it about right now?

Anyone contemplating instigating a gifts out of income iht mitigation strategy should first take a  look at form IHT 403 and the gifts out of income schedule at page 8.  This gives an indication of the level of granular detail expected of  executors to demonstrate ( to HMRCs satisfaction) that excess income was indeed available  for each year of the purported gifts. 

 It is recommended that if anyone is serious about the exemption being invoked by their executors on eventual death, they complete each year a detailed income and expenditure schedule for their executors' assistance.

It is apparent from the queries raised by OPs on this subject, that there is often a vague understanding of the distinction between capital and income in determining excess income on a year to year basis. In this regard, OPs are  directed to HMRCs internal manuals, a link to part of the manual is shown below, and scrolling backwards and forwards from that page will give a more complete understanding of the hoops executors will need to jump through in successfully claiming the exemption.


https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14250


OPs should be aware that although income in the IHT legislation is not specifically defined, it is to be determined by HMRC officers  ' in accordance with normal accountancy rules'.

 If you are not accountancy trained, you are already at a disadvantage here.  As an example the 5% withdrawal facility from investment bonds is often characterised as income by insurance companies. It is not, its a return of your original capital. However, contrast this with pensioners taking regular UFPLSs from their SIPP. One might assume the element related to tax free cash should not be considered income, but apparently the entirety of the payment is income for the purposes of the exemption.

 Also take a look at the annuities heading in the HMRC manual link above. In the case of purchased life annuities ( ie, purchased from your own capital rather than from accumulated pension funds), the return of  capital element is not income for the purposes of the exemption.

What of ISA income which has not been distributed to the investor in the year, is that to be considered available income in subsequent years in ascertaining excess income? Well HMRC concede that although there are no hard and fast rules,  in the absence of evidence  to the contrary they  rather arbitrarily state that in general, unspent income becomes capital after two years.

The above examples are indicative of the sort of things a trained tax accountant should know if advising a client, but would the ordinary lay person be cognizant of these nuances in attempting DIY planning of their own?

In summary, in drawing attention to the schedule to IHT403, and HMRC's extensive guidance manuals on the subject,  OPs should acquaint themselves with the challenges their executors may face in proving the validity of  gifts out of excess income claims, and provide them with coherent records to do so. This is especially the case where OPs may also wish to utilise any of the various other capital gifts exemptions in a particular year, such as PETs and the £3,000 gifts  exemptions.

Just a bit more background to my thoughts on this matter.

I have no experience of people attempting to secure this exemption on a DIY basis. 

Prior to my retirement,  my firm routinely reccomended the availability of this exemption to clients who typically had high 6 figure incomes pre and post retirement and on whose behalf we prepare and submit their tax returns. With that granular insight into their income and capital affairs and indepth knowledge of HMRC criteria for acceptance of the relief, we then devise the annual paper trail of necessary evidence for those clients inclined to utilise the exemption.

Typically those clients are minded to make 5 figure annual gifts out of income, in addition to substantial capital gifts ( requiring 7 year survival) so a coherent water tight paper trail is necessary to ensure their objectives are met.

To that end, we would  eventually compile the submissions for the purposes of the IHT 403  declarations on behalf of the executors. 

The point being made is in general, the exemption is neither well known or utilised by those in a position to benefit from it. The professional accountancy and legal firms who have the HNWI client base who can benefit, propose and implement the appropriate strategies and supporting evidence to ensure HMRC's ultimate acceptance on their behalf.

For those lower down the income/wealth scale now considering implementing the exemption on a DIY basis , spare a thought  for your executors who will have no knowledge of HMRC's rules and criteria and may not be possessed of personal insight of your income/expenditure/capital to launch a convincing claim on your estate's behalf. You, therefore, during your lifetime are trying to replicate  (as best you can)  the kind of cohesive papertrail prepared on behalf of  professionally advised persons.    

 Bear in mind the whole ethos and complexity  of original inheritance tax/ death duty legislation  (as well as case law pertaining thereto ) was built on the edifice of taxing a very small  select group of the population, who typically would have accountants/lawyers  assisting and navigating these matters on their behalf. 

With the significant rise in house prices over the last 30/40 years , and the shrinking ( by default ) of the nil rate band ( unchanged for 14 years!) a broader mass affluent  population has emerged who are not routinely professionally advised. 

Other than the increase of the nil rate band from the original 1987 £71k level to £325k currently , the inherent complexity of the Inheritance tax system has not been adjusted for this changed demographic. So blithely assuming HMRC will take an understanding 'commonsense' stance when addressing this exemption claim from estates which are not professionally advised and where the deceased made little effort to provide the executors with acceptable evidence, I would suggest would be a mistake. 

Perhaps anyone who has been the executor of an estate, claiming this exemption without the benefit of professional intervention could relate their experiences in this regard?

I successfully claimed >>£200K of gifts from income with over 500 relevent transactions. There was no professional involved in calculating the data and completing the form.  HMRC accepted the numbers without argument, perhaps because they did not want to wade through dozens of pages of annotated bank statements and spreadsheet results. 

It was pretty straightforward with no need for smoke and mirrors or dubious categorisation since the deceased had a very large annuity way beyond his normal expenditure  and lived well into his 90s. I was greatly helped by him having prepared a summary of income, expenditure and gifts at the end of each year..

Excellent outcome.

However you support  my point about the deceased having been proactive during his life time  in preparing annual summaries in terms of income, expenditure and gifts to assist you with making the claim. Imagine what your task would have been like without his considerate efforts. 

Whether professionally advised or not, a team approach necessary - the deceased by way of coherent and systematic record keeping and the executor ( or executor's assistant) with the ability and willingness to collate and present the necessary data in a manner acceptable to HMRC. I don't know about you, I don't know many people over 80 that could maintain the kind of annual records made available to you by the deceased.

You have to wonder, how many people posting on this  thread could do what you and the deceased did in eventually securing the exemption for the the quantum of gifts in question.

LHW99

I had a look at IHT403, as the 2027 rules are likely to require this (or similar) to be filled in.

Horror! - the required categories are completely different to those I have been using for the past x years to classify / group expenditure.

I shall try to re-classify expenditure from now, and in at least the last couple of financial years, and hope to last long enough that any executors will have the information they need at some (hopefully long) time in the future.

Sarahspangles

poseidon1 said:

I don't know about you, I don't know many people over 80 that could maintain the kind of annual records made available to you by the deceased.

This is what I mean by muddle in the estates I’ve helped with. The executors were confident that records would be thorough and accurate but there had been deteriorating capacity over several years that had been well masked. In fact a lot of documents had been disposed of including passbooks, cheque stubs were partially completed, and then inaccurately, and the wills themselves were misplaced.

BikingBud

LHW99 said:

I had a look at IHT403, as the 2027 rules are likely to require this (or similar) to be filled in.

Horror! - the required categories are completely different to those I have been using for the past x years to classify / group expenditure.

I shall try to re-classify expenditure from now, and in at least the last couple of financial years, and hope to last long enough that any executors will have the information they need at some (hopefully long) time in the future.

But are they not only indicative? To give a feel for the level of detail that might be required.

If you are fortunate to have post tax DB pension income of say £50K and SP - Net Income is 2 rows, possibly 3 if you include tax but as you will likely offset SP against your tax allowance it is likely DB will be listed as net income.

If you have no mortgage and only pay household bills including Council Tax, Insurance, Utilities, etc all coming to <£SP then in essence you have £50k surplus.

All figures will hopefully increase to align with inflation and keep the ratios the same.

So you will always have ~£50 k surplus unless you start shedding early while you will find that according very quickly into capital that cannot be disbursed as easily.

So I feel that Line 22 will be the most populated!

I use this as an annual budget:

With a build up of monthly into annual spend, post mortgage column and a mortgage run on cost if the follow on interest rates are worthwhile, this feeds into another part of the excel where income is tracked. Both are inflated together with expenditure occasionally being inflated at a penalty rate of +2 or 3% over income inflation so I can see a running buffer and then plan Gift from Income as required. The misc cell gives monthly buffer that builds up over the year and can be used to bail out where required. Other family members fully aware although I do get ridiculed regularly about spreadsheets!

LHW99

BikingBud said:

LHW99 said:

I had a look at IHT403, as the 2027 rules are likely to require this (or similar) to be filled in.

Horror! - the required categories are completely different to those I have been using for the past x years to classify / group expenditure.

I shall try to re-classify expenditure from now, and in at least the last couple of financial years, and hope to last long enough that any executors will have the information they need at some (hopefully long) time in the future.

But are they not only indicative? To give a feel for the level of detail that might be required.

If you are fortunate to have post tax DB pension income of say £50K and SP - Net Income is 2 rows, possibly 3 if you include tax but as you will likely offset SP against your tax allowance it is likely DB will be listed as net income.

If you have no mortgage and only pay household bills including Council Tax, Insurance, Utilities, etc all coming to <£SP then in essence you have £50k surplus.

All figures will hopefully increase to align with inflation and keep the ratios the same.

So you will always have ~£50 k surplus unless you start shedding early while you will find that according very quickly into capital that cannot be disbursed as easily.

So I feel that Line 22 will be the most populated!

I use this as an annual budget:

With a build up of monthly into annual spend, post mortgage column and a mortgage run on cost if the follow on interest rates are worthwhile, this feeds into another part of the excel where income is tracked. Both are inflated together with expenditure occasionally being inflated at a penalty rate of +2 or 3% over income inflation so I can see a running buffer and then plan Gift from Income as required. The misc cell gives monthly buffer that builds up over the year and can be used to bail out where required. Other family members fully aware although I do get ridiculed regularly about spreadsheets!

Problem is, I have used a somewhat simpler scheme, whereby I have regular DD/SO as a category, then food / car costs, then everything else. The first 2 columns are the "have to cover costs", that which remains is the "flexible / cut downable".

Plus have SP, DB, self-employed income (and DC if needed) for income.

Doesn't really fit in with how the form has to be completed (and I wouldn't be around to help / explain)