Normal expenditure out of income

dales1

You say you have have good records of gifts and bank statements. That is good.

But HMRC do insist on receiving a completed form IHT403 (from your executors) in order to claim the gift exemption. (They will not be 'satisfied' until then. Unfortunately they will not be 'satisfied' by evidence of a monthly bank account surplus).

So your executors will certainly need to compile a full analysis of income and expenditure (per IHT403).

(… My executors certainly will. That is why I maintain a draft, so that they can bring it up to date).

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82057813#Comment_82057813

They might know the amounts gifted, but without detailed records of expendature you would be creating a lot of work for your executors.

poseidon1

Curious that the OP seems resistant to organising his financial record keeping in accordance with the requirements of IHT 403.

Seems he is determined to impose a significant burden on his executors of trawling through years of his bank statements to prove that his gifting falls within the strictures of HMRC's complex rules of what constitutes income and what represents 'normal expenditure' in arriving at the 'surplus'.

He opened this thread expressing concern that he maybe opening his estate to potentially higher IHT by reason of generosity in favour of ex wife, but does not wish to accept any advice to ensure his executors will be able to easily compile the data to prove his assertions.

phlebas192

https://forums.moneysavingexpert.com/discussion/comment/82057523#Comment_82057523

I have sympathy with your view, but the key point here is that it really does not matter whether you are satisfied or not. By the time it becomes an issue you will, by definition, be dead so your opinion won't count in the slightest. It will be up to your executor(s) to demonstrate that your estate has a valid claim under the normal expenditure out of income exemption. If you are keen that they do so then you really should make things as easy for them as possible.

IHT 403 level of recording has no status in legislation. But it is what HMRC will accept. Anything else is likely to be challenged. Given the relatively small amounts involved, your executor(s) would be mad to take any HMRC challenge to court so expect them to cave in unless they are prepared / capable of recreating the IHT 403 information.

Bottom line: if you wish your estate to take advantage of the normal expenditure from income exemption then you should make things easy for your executor(s) to claim it.

nb: you can completely ignore the payments to your wife. As long as you are still legally married then there are no IHT implications for anything you give her.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82058405#Comment_82058405

My error entirely. Thread seems to have moved away from the concerns of the original poster.

Fiacre

https://forums.moneysavingexpert.com/discussion/comment/82057398#Comment_82057398

Thank you and everyone else for their thoughts. I am a little more at ease about this now.