Inheritance Tax and replacement double glazing.

johnnyseven268

I am making monthly gifts to my children out of "Normal Expenditure".

I have just paid a deposit of £902 and will in the next financial year pay £3,609 on completion of replacing single glazed windows and a backdoor with double glazed windows and door.

My question is - is this classed as Capital spending or Normal expenditure spending.

If the latter, I will have to reduce my monthly gifts.

eskbanker

johnnyseven268 said:

If the latter, I will have to reduce my monthly gifts.

Why would you have to do that?  If the gifts were deemed not to qualify for IHT exemption, the money would ultimately be included in your estate's IHT bill (if any) whether gifted or not, i.e. gifting can never worsen the IHT position....

johnnyseven268

eskbanker said:

johnnyseven268 said:

If the latter, I will have to reduce my monthly gifts.

Why would you have to do that?  If the gifts were deemed not to qualify for IHT exemption, the money would ultimately be included in your estate's IHT bill (if any) whether gifted or not, i.e. gifting can never worsen the IHT position....

Hello eskbanker, I now have the answer to my question and it is Normal Expenditure spending according to HMRC.

Regular gifting out of income is IHT free as long as you can show HMRC that it is out of income.

eskbanker

johnnyseven268 said:

eskbanker said:

johnnyseven268 said:

If the latter, I will have to reduce my monthly gifts.

Why would you have to do that?  If the gifts were deemed not to qualify for IHT exemption, the money would ultimately be included in your estate's IHT bill (if any) whether gifted or not, i.e. gifting can never worsen the IHT position....

Hello eskbanker, I now have the answer to my question and it is Normal Expenditure spending according to HMRC.

Regular gifting out of income is IHT free as long as you can show HMRC that it is out of income.

Yes, I know about the regular gifting provision but was making the point that if you choose to reduce gifts, the money stays in your estate and would ultimately be subject to the same IHT as it would have if you'd made the non-qualifying gifts, so the net position remains the same.  In other words, it wouldn't appear to make financial sense from an IHT perspective to reduce the gifts, and it may be advantageous from the recipients' perspective to leave them at the same level....