IHT 403 - Gifts out of income where husband / wife income is combined

bakkesukuk

Although I do not foresee either myself or wife actually bothering the £325k threshold, I am thinking of creating records to support the probate / IHT 403 process on the death of either myself or wife, in the main to reduce the burden on our children who will be executors.

We pass money on to our kids on a regular basis - some monthly, other times to cover medical or other pinch points / emergencies, xmas, birthdays, weddings. Apart from one or two significantly large amounts we would argue that all of these are gifts out of income and demonstrably do not affect our standard of living.

The question is - throughout our relationship we have always had a joint bank account into which all earnings / pensions / investment income goes and from which all outgoings are paid.

Money to the children also goes out of this account - and as such we see it as a "gift from both of us" and generally take the view that it is a 50/50 split if it comes to any scrutiny. However for IHT purposes, based on the individual, our incomes are not equal with the regular monthly incomes probably / roughly split 66/33.

I intend going back to April 21 because in that tax year we gave our eldest £50k to help buy a property so that will need to be declared and I assume will count towards the £325k and so if HMRC decide to dig it will probably be from that point on. It is a lot of work to gather the information as defined on the 403 for two people, so would prefer to set off on the right foot.

Any one got any views / experience on how to approach this. Is it a simple as, for 403 purposes,calculating any money given to children on the same 66/33 basis as income ?

Thanks, Mike

poseidon1

You do realise your joint NRB thresholds total £ 1 million ( £500k each) not £325k?

Unless your joint estates are anywhere near the £1 million mark, do you even need to concern yourselves about gifts out of surplus income record keeping?

Keep_pedalling

if you joint net worth is nowhere near you total exemptions (£650k if you are not home owners, up to £1M if your are) then is is a pointless excise and just complicates things for your executors.

BikingBud

For some potentially, steady and index linked DB payouts till death and possible with survivor benefits the estate might grow quite rapidly and it might be very worthwhile.

Much easier to start and not need rather than worry after the case.