Surplus income and IHT403

[pvt12]

Does anyone know if annual premium bond winnings can be included as income on page 6 of IHT403 (and hence contribute to surplus income)? If so presumably it should be included under the 'Other' income category'.

Also I've read somewhere that income is regarded as becoming capital after two years. Does this mean that surplus income can be carried forward two years towards gifts out of income in subsequent yers?

[probate_slave]

Yes and yes to the 1st para. Conditional yes to the 2nd.

You may have already seen the IHT manual:
http://www.hmrc.gov.uk/manuals/ihtmanual/IHTM14250.htm
which clarifies the 2-year rule, with conditions.
In practice, the wording of the Act is sufficiently vague that its interpretation is down to the technical officer handling the IHT account, but the intention is to allow income "taken from year to year" to be available.

HMRC definition of "income" for the exemption is quite generous and certainly includes Premium Bond winnings. You can also include the DWP Winter Fuel Payment and Christmas Bonus in "Other" income. Accumulation dividends on Unit Trust holdings are allowed, as are annual interest payments on National Savings Certificates (although NS & I themselves insist these are capital, and are very unwilling to give up the details).

[strawn]

Golly! Do HMRC also count the inflation-linking on Index-Linked Savings Certificates as income for these purposes?

[pvt12]

probate_slave - Thanks for this advice, very helpful.

pvt12