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Where Taxpayers and Advisers Meet

Advice requested on declaration of gifts

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm
Advice requested on declaration of gifts

Postby Remittub » Wed Mar 02, 2022 8:39 am

My wife passed away recently, and as sole executor (and beneficiary), I need some advice regarding the declaration of gifts made within the 7 years prior to her death – we have mirror wills.
We decided in 2015 that we should start divesting our assets to minimise future IHT liability. It also enabled us to fund our youngest daughter to purchase a modest house, which otherwise she would not be able to afford. To compensate our other daughter, we (overall) gifted her with the equivalent amount. We funded these gifts from life-long savings and sale/transfer of shareholdings. All payment of gifts was from our joint bank account.
My question is what HMRC will accept as proof of the gifts ! To my mind, the simplest would be in the form of bank statement entries – or would they require tracing back to solely held accounts ? The simplicity of the former would allow me to literally halve these gift amounts, 50% being made by my wife (and thus declared in her probate application), the other 50% being potentially exempt gifts from my future estate.
I would greatly value your advice on this – thank you in advance !

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Advice requested on declaration of gifts

Postby pawncob » Wed Mar 02, 2022 11:32 am

Unless you're subject to an enquiry, HMRC don't require any evidence of gifts. You sign a statutory declaration when you complete the IHT return.
With a pinch of salt take what I say, but don't exceed your RDA

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm

Re: Advice requested on declaration of gifts

Postby Remittub » Wed Mar 02, 2022 12:00 pm

Thanks pawncob, but ...

"The simplicity of the former would allow me to literally halve these gift amounts, 50% being made by my wife (and thus declared in her probate application), the other 50% being potentially exempt gifts from my future estate"

Is this what I should do when I calculate whether IHT is due, or not ?

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Advice requested on declaration of gifts

Postby pawncob » Wed Mar 02, 2022 12:27 pm

I would hope that when the gifts were made, they were evidenced by letters stating who was making the gift.
If not, what evidence is there that the gifts were 50/50?
I would suggest you declare them as you believe they were made.
With a pinch of salt take what I say, but don't exceed your RDA

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm

Re: Advice requested on declaration of gifts

Postby Remittub » Wed Mar 02, 2022 12:52 pm

I’m afraid there were no letters stating who was making the gifts. (and there were many over the years, as the need arose)
Would HMRC not accept that as the gifts were made from a joint bank account that the gifts were jointly made (i.e. 50/50) ? Or would they insist that a specific gift was connected to a sole account (Building society, or other investment) in her name – that would be a LOT of work to document…. !
Should I still apply for probate assuming 50/50 split ? – using that assumption, the estate would fall in the NRB as the threshold would not be exceeded.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Advice requested on declaration of gifts

Postby pawncob » Wed Mar 02, 2022 5:11 pm

Make a return using 50/50 split, as you know that is the correct position.
With a pinch of salt take what I say, but don't exceed your RDA

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm

Re: Advice requested on declaration of gifts

Postby Remittub » Wed Mar 02, 2022 7:35 pm

Thank you pawncob for your advice - much appreciated !!


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