Gifting, IHT, ISAs and record keeping

scaashiana

Hi

I'm looking for confirmation around my thinking here please.

I have been gifting each of my two daughters between £3k and £20k each year, over the last ten years.  This has come from my personal savings (sourced from PAYE) and transferred to my daughters personal current accounts, from which they have been investing it into their personal Stocks & Shares ISAs, literally on the day that they receive that transfer.

1. I believe that these these cash transfer gifts are exempt from IHT after 7 years of the date of that transfer.

2. I believe that any investment growth in the ISAs are exempt from IHT and CGT.

3. What records should I be keeping of these transfers?  I currently have details (date, amount, account transferred to) in a spreadsheet.  Would this suffice for IHT challenges in the future?

Thank you

Keep_pedalling

Yes the gifts fall out of your estate after 7 years, but ISAs are not exempt from IHT. On this last point it is not clear if you are retiring to your own ISAs to your daughters ISAs. If the latter then you can ignore it as it is the value of the gift at the time of making the gift that you need to record, what happens to it after that impacts their estates not yours.

Your spreadsheet should suffice, just make sure you keep a copy where your executors can easily find it. 

ColinGala

You could also investigate 'Gifts made as part of normal expenditure out of income' to offset IHT for the gifts you've made to your daughters over the last 7 years. Download form IHT403 and look at the last page for info. 
You could inform your Executor that your ISA can retain it's CGT and income exemptions for up to 3 years after passing if you're confident in your share picking prowess

km1500

I believe you also have an allowance each year you can gift without incurring IHT - about 3K?

Keep_pedalling

km1500 said:

I believe you also have an allowance each year you can gift without incurring IHT - about 3K?

It’s an exemption rather than an allowance and yes it is £3k.

km1500

Keep_pedalling said:

km1500 said:

I believe you also have an allowance each year you can gift without incurring IHT - about 3K?

It’s an exemption rather than an allowance and yes it is £3k.

is there a difference ? (genuine question)

tacpot12

Keep_pedalling said:

Yes the gifts fall out of your estate after 7 years, but ISAs are not exempt from IHT. On this last point it is not clear if you are retiring to your own ISAs to your daughters ISAs. If the latter then you can ignore it as it is the value of the gift at the time of making the gift that you need to record, what happens to it after that impacts their estates not yours.

Your spreadsheet should suffice, just make sure you keep a copy where your executors can easily find it. 

While this is good advice, another option to consider is a Password Manager. My Password Manager allows more than just passwords to be stored in the 'vault'. You could keep the details of your gifts in a Password Manager along with passwords that will make it easier for your executors to wind up your estate.