Inheritance tax 'normal expenditure' for married couple

Strasbourg1955

For demonstrating gifts out of surplus income, I believe it's expected that household expenses will be split equally between husband and wife. That's easy for major items such as energy, Council Tax and car insurance. But we pay randomly for food shopping, meals out, petrol etc. It depends who goes to the supermarket. We don't have a joint bank account or credit card. Do we have to go through our credit card statements and work out which was a shared purchase (e.g. supermarket) and which was an individual (e.g. haircut or coffee with a friend)? That's a nightmare! It's much easier to work out our annual expenditure by each totalling our current account and credit card statements for the year. Advice welcome.

silvercar

https://forums.moneysavingexpert.com/discussion/6660587/inheritance-tax-039-normal-expenditure-039-for-married-couple

I would have thought it would be based on historical spending rather than split equally. It may be the case that in the years immediately prior to passing, spending is split in a very unequal manner due to pensions or other disparities in income.

Keep_pedalling

If you want to make use of this exemption then you will need to go to the trouble of documenting of joint and personal expenditure, so maybe time to get a joint account to cover food shopping CT ect to make life easier.

Does your joint net worth actually take you into IHT territory?

dales1

I agree with silvercar. IHT is essentially about the finances of the deceased, alone.

So I draft my IHT403 based on my own spending, and my partner does hers likewise independently. [That way, my remaining funds for gifting are clearly in my bank account, not hers (or vice versa)].

It may well be that HMRC would accept a calculation based on pooled spending. But it seems a stretch too far to assume that they "expect" household spending to be split equally.

If you do want to achieve that result, then you seem to need a joint account, as said above, but it really doesn't seem worth the admin to me.