Gifts from income help
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Boleyn19
Posts: 100 Forumite
I am looking at sorting out our financial records to make dealing with our estate easier. I am confused as to gifts from income - to make gifts for our two sons (one is 15 and the other 19 and at University). We are both retired, have no mortgage and our income is pensions, rental on a house, dividends, interest.
My queries are
1. Are our incomes joint for this purpose ie if I make a gift from an account in my name is my husband's income taken into account or must it come from a joint account.
2. Are living expenses for our elder son exempt from IHT - we give this in lump sums as college fees/house rental is not paid monthly.
3. Are any gifts to our younger son, who is living at home and in full-time education exempt (eg putting money in a JISA).
Thanks in advance.
My queries are
1. Are our incomes joint for this purpose ie if I make a gift from an account in my name is my husband's income taken into account or must it come from a joint account.
2. Are living expenses for our elder son exempt from IHT - we give this in lump sums as college fees/house rental is not paid monthly.
3. Are any gifts to our younger son, who is living at home and in full-time education exempt (eg putting money in a JISA).
Thanks in advance.
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Comments
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Gifts from income have to be from excess income. Does your income actually exceed expenditure by in excess of the £3000 annual you already have available to you?
Living expenses and JISAs have no special exemptions.0 -
Keep_pedalling wrote: »Gifts from income have to be from excess income. Does your income actually exceed expenditure by in excess of the £3000 annual you already have available to you?
Living expenses and JISAs have no special exemptions.
Gifts for the maintenance of family can be exempt under section 11 Inheritance Tax Act 1984.
https://www.legislation.gov.uk/ukpga/1984/51/section/110 -
Gifts for the maintenance of family can be exempt under section 11 Inheritance Tax Act 1984.
https://www.legislation.gov.uk/ukpga/1984/51/section/11
From the link given it would seem that the living expenses of our 19 year old whilst in full time education is nit part of IHT
"A disposition is not a transfer of value if it is made by one party to a marriage [F1or civil partnership] in favour of the other party or of a child of either party and is—
(a)for the maintenance of the other party, or
(b)for the maintenance, education or training of the child for a period ending not later than the year in which he attains the age of eighteen or, after attaining that age, ceases to undergo full-time education or training".
It would seem that giving your child savings would be part of IHT?0 -
From the link given it would seem that the living expenses of our 19 year old whilst in full time education is nit part of IHT
"A disposition is not a transfer of value if it is made by one party to a marriage [F1or civil partnership] in favour of the other party or of a child of either party and is—
(a)for the maintenance of the other party, or
(b)for the maintenance, education or training of the child for a period ending not later than the year in which he attains the age of eighteen or, after attaining that age, ceases to undergo full-time education or training".
It would seem that giving your child savings would be part of IHT?
According to the legislation, what's important is that the purpose for which the gift was given meets the stated requirement. If it meets that requirement then the gift will be exempt for inheritance tax purposes.
Other gifts in excess of each of your £3000 per annum allowance are potentially exempt if you survive the gift by 7 years.0 -
Thank you.
The gift to our elder son certainly meet the requirement.0 -
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A point of clarification. We are paying his maintenance costs but not tuition fees. To help him learn budgeting we gave him the full annual amount from which he pays all his costs - including hefty College fees at the beginning of each term. I assume this is still exempt rather than paying monthly which would not have helped him with the big bills.0
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A point of clarification. We are paying his maintenance costs but not tuition fees. To help him learn budgeting we gave him the full annual amount from which he pays all his costs - including hefty College fees at the beginning of each term. I assume this is still exempt rather than paying monthly which would not have helped him with the big bills.
You can make gifts of any amount to your son towards his maintenance costs without using up your annual allowances. The family maintenance and the annual allowances are separate exemptions.0 -
Sorry, I did not make myself clear. Is the gift towards maintenance costs exempt if it is given in a lump sum for that purpose?0
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Sorry, I did not make myself clear. Is the gift towards maintenance costs exempt if it is given in a lump sum for that purpose?
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.0
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