Postby Tim63 » Fri Nov 24, 2017 1:11 pm
Hope I'm not hijacking a thread here, but I'm new to this forum and need some help with precisely this subject.
My mother died recently and she and my father had been in the habit of giving away their surplus income in various ways. I'm reasonably confident that they had taken all the steps necessary to demonstrate that this was indeed habitual but on being confronted with completing IHT403 a question arises that we had never previously contemplated and that is how to determine surplus income, or rather it's allocation between my mother and my father. My father's record keeping is good and he has documentation supporting how he has arrived at surplus income and I had always just assumed that you'd take net income less total expenditure, divide by two and that was the amount that my mother could gift out of surplus income. However, when confronted with completing IHT403 there is a presumed expectation (I think) that my mother's net income would be essentially in line with what would have gone on her tax return (had she been required to complete one) plus any non-taxable income (ISAs etc) less tax payable. This is not the same as half my two parents' net income. So how does one allocate normal expenditure between the two spouses? Or should I be looking at gifts between my parents in order to bring their net incomes in line or amending the split of the gifts out of income so that the end result is the same but the amount gifted by mother and father is different?
This never even occurred to me before because my parents would never have regarded anything as belonging to one or other of them - everything was regarded as joint, regardless of whether legally (and fiscally) it was or not.