Charitable Donations and Gifts out of Surplus Income (IHT)

File_Explorer

Thanks again,

What a minefield. I also noticed there was no-where to include the charitable gifts in the IHT403, so was hoping they werent looking for them for the calculation.. Ah well, wishfull thinking...

I imagine the overall end result of these rules will be charitable donations will suffer if people are having to choose between IHT free gifts to family members or gifts to charity.. Not that they will be able to work this out easily, lol.

Again, thanks for everyones input, much appreciated.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81875233#Comment_81875233

There is however the catch all ‘other’ to cover unspecified expendature.

probate_slave

Personally I take the opposite view to those above. Where the legislation mentions "normal expenditure", it is the gifts for which NEOOI is being claimed which are required to be normal. And it is those gifts alone which must not affect the transferor's standard of living. We are not concerned in s.21 with other gifts, either exempt or chargeable. HMRC manuals repeatedly refer to "living expenses". A gift, charitable or otherwise, cannot be regarded as a living expense. And this is borne out by the structure of IHT403 where all gifts including the charitable ones are reported on pages 3 & 4, while page 8 asks only for gifts for which NEOOI is being claimed.

We also have IHTM14132 which clarifies that available income for NEOOI gifts is considered first, before other exemptions are applied. This suggests (to me) that gifts under the charity exemption are not counted against surplus income for NEOOI relief.

The question of available income tax or CGT for Gift Aid is quite separate in my view.

I claimed NEOOI in two estates. I excluded charity gifts from expenditure on p.8, and neither time was this challenged - though I should perhaps mention that surplus income would have covered them in any case.