Gifts from income help
Comments
-
Think how silly it would be if you could not save up to put your kids through university or pay for a school trip for younger child with it becoming a PET.0
-
Yes - exempt gifts towards family maintenance can be paid out of income or savings.
Originally you asked about making exempt gifts out of your income. These gifts must only be paid out of income, be a part of your normal expenditure to the recipient and you must be left with sufficient income to maintain your usual standard of living.
I was asking about both, though I dod not make it clear.
In my OP I also asked whether gifts out of income took both of our incomes into account. If so do gifts have to be made out of joint accounts.
Also is it gross income?
Thanks again in advance.0 -
getmore4less wrote: »Think how silly it would be if you could not save up to put your kids through university or pay for a school trip for younger child with it becoming a PET.
I was hoping this would be the case but I'd read that they had to be regular sums - but that might be to do with gifts out of income rather than for university expenses.0 -
I was asking about both, though I dod not make it clear.
In my OP I also asked whether gifts out of income took both of our incomes into account. If so do gifts have to be made out of joint accounts.
Also is it gross income?
Thanks again in advance.
According to the legislation, gifts out of income only take into account the income of the person who makes the gift. In my opinion, if one of you has surplus income but the other does not then I would not make the payments out of a joint account but out of the account of the main earner. I would think it would be the net sum, as the income won't be surplus if you haven't paid the taxman. As previously surmised, the gifts need to satisfy the conditions of section 21(1) Inheritance Tax Act 1984:
https://www.legislation.gov.uk/ukpga/1984/51/section/210 -
I was hoping this would be the case but I'd read that they had to be regular sums - but that might be to do with gifts out of income rather than for university expenses.
Gifts from income do not have to be regular sums and can include saved up money you just need more context to establish boundaries of what is acceptable.
It really is worth spending some time on Google and researching HMRC cases.0 -
getmore4less wrote: »Gifts from income do not have to be regular sums and can include saved up money you just need more context to establish boundaries of what is acceptable.
It really is worth spending some time on Google and researching HMRC cases.
I have been researching extensively and I get different answers, even on expert sites. Some say that exempt gifts out of income have to be regular giving whilst PETs do not have to be.0 -
I was hoping this would be the case but I'd read that they had to be regular sums - but that might be to do with gifts out of income rather than for university expenses.
If you are thinking about exemption gifts based from surplus income, then the payments do have to show a regular pattern so as to establish that it is a normal pattern for your gift and a normal expenditure, rather than a "one off" gift that would be considered as a capital gift. There is no definition, though, that categorically states what constitutes a pattern or at what frequency. I think that a regular annual payment would be acceptable and demonstrable. Less frequent could be questioned.0 -
I have been researching extensively and I get different answers, even on expert sites. Some say that exempt gifts out of income have to be regular giving whilst PETs do not have to be.
This is the relevant piece of legislation from the link above. The point (a) below is where the gifts are from regular sums which would be a person's normal expenditure (ie monthly). It would be difficult to argue that normal expenditure (food, energy, mortgage, entertainment) is paid annually out of savings.
Thanks to the people on here for helping.
Normal expenditure out of income.
(1)A transfer of value is an exempt transfer if, or to the extent that, it is shown—
(a)that it was made as part of the normal expenditure of the transferor, and
(b)that (taking one year with another) it was made out of his income, and
(c)that, after allowing for all transfers of value forming part of his normal expenditure, the transferor was left with sufficient income to maintain his usual standard of living.0 -
Given the amount of money likely to be involved trying to DIY it based on what unknown posters say is false economy. You really need some professional advice on your financial affairs as a whole not just this aspect. Those who you can DIY it are simply wrong. You can’t afford to take the advice from this forum.0
-
Read Court cases.0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards