Gifts from Income

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Gnittih
Gnittih Posts: 52 Forumite
in Savings & investments
If I make monthly contributions into JISAs from a joint bank account into which my retirement income is paid,how do I ensure that contributions are attributed to me (for HMRC acceptability)and not my wife who is the other joint owner of the bank account.

Is it sufficient that I sign the investment application form at the same time as thr Direct Debit authorisation referring to the joint bank account?
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  • Keep_pedalling
    Keep_pedalling Posts: 16,641 Forumite
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    All our giving comes out of a joint account, we just keep a record of who gave what to who over the last 7 years and keep a copy with our wills. Be careful about the validity of giving from income, you can't for instance claim that, and in the same financial year raid your savings to pay for a holiday, new car or new boiler.

    We can't gift from income because we are drawing down from savings to support our current lifestyle.
  • Gnittih
    Gnittih Posts: 52 Forumite
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    Thanks,..but holidays,car,etc would come from capital!,
  • Keep_pedalling
    Keep_pedalling Posts: 16,641 Forumite
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    Gnittih wrote: »
    Thanks,..but holidays,car,etc would come from capital!,

    But that was my point, if your annual spend is higher than your income, including capital spend, you cant claim IHT exemption on gifts from income.
  • Gnittih
    Gnittih Posts: 52 Forumite
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    I understand that expenditure such as utilities,car/house insurance,household costs etc need to be subtracted from Income to realise what part of income can go to gifts!...but that surely doesn't include my spend on a new car at say £30000 which would come from capital savings in a Building Society or from :money:other Equity investment.?
  • Linton
    Linton Posts: 17,173 Forumite
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    Keep Pedalling is correct, you cannot claim IHT exemption for gifts from income if your capital is decreasing. Your total income must exceed your total expenditure. However you do have carry over of IIRC 3 years.
  • Skibunny40
    Skibunny40 Posts: 436 Forumite
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    So as long as the savings/investments had a good year, and the total is the same or higher at the end of the year than the previous year, it would be okay to buy eg. a new car for £30k and still be able to justify other gifts from income?
  • Gnittih
    Gnittih Posts: 52 Forumite
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    Linton wrote: »
    Keep Pedalling is correct, you cannot claim IHT exemption for gifts from income if your capital is decreasing. Your total income must exceed your total expenditure. However you do have carry over of IIRC 3 years.

    What does IIRC refer to?

    If capital is involved in any calculations,it becomes pointless setting up a continuous Direct Debit of Gift, since at some year during this gift making one will probably make a large purchase from capital!
  • Keep_pedalling
    Keep_pedalling Posts: 16,641 Forumite
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    Gnittih wrote: »
    I understand that expenditure such as utilities,car/house insurance,household costs etc need to be subtracted from Income to realise what part of income can go to gifts!...but that surely doesn't include my spend on a new car at say £30000 which would come from capital savings in a Building Society or from :money:other Equity investment.?

    Yes it does, anything you spend whether a loaf of bread or a new car counts as part of your annual spend. The gifting from income exemption is designed for people who's excess income would simply go to increase the size of their estate and add to their estates IHT liability. If you are giving and at the same time spending your capital this is not the case.

    If you are both reasonably healthy and you want to reduce the impact of IHT on your heirs, then make use of both your £3000 allowances, use the 7 year rule to gift more, and cover any IHT that may fall on those gifts with a second death term insurance. This is basically what we have done.
  • Keep_pedalling
    Keep_pedalling Posts: 16,641 Forumite
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    Skibunny40 wrote: »
    So as long as the savings/investments had a good year, and the total is the same or higher at the end of the year than the previous year, it would be okay to buy eg. a new car for £30k and still be able to justify other gifts from income?

    No, it is based on what you spend against your income, capital gains are not considered as income.
  • Linton
    Linton Posts: 17,173 Forumite
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    Skibunny40 wrote: »
    So as long as the savings/investments had a good year, and the total is the same or higher at the end of the year than the previous year, it would be okay to buy eg. a new car for £30k and still be able to justify other gifts from income?

    No, investment gains aren't income. The test is simply expenditure vs income over 3-4 years.
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