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Where Taxpayers and Advisers Meet

Gifts from Surplus Income

Marco111
Posts: 5
Joined: Tue Nov 05, 2019 4:07 pm

Gifts from Surplus Income

Postby Marco111 » Fri Nov 29, 2019 3:30 pm

It has been said that for "Gifts out of Surplus Income" to qualify for IHT exemption, they should be regular. Insurance payments and ISA contributions have been given as examples of this. Would a regular contribution to someone's rent or mortgage payment qualify as such a gift and be considered exempt for IHT purposes?

Also, would this have to be a regular monthly payment, or could you say pay for three months worth of rent or mortgage, at the end of the tax year when you have an idea of what is actually left over and surplus?

AGoodman
Posts: 881
Joined: Fri May 16, 2014 3:47 pm

Re: Gifts from Surplus Income

Postby AGoodman » Mon Dec 02, 2019 11:12 am

Both should be fine (subject to the other requirements being fulfilled). It is really just a case of showing a pattern. There are no rules around what the pattern should look like.

langtonbrow
Posts: 36
Joined: Tue Mar 10, 2009 1:52 pm

Re: Gifts from Surplus Income

Postby langtonbrow » Tue Dec 03, 2019 2:25 pm

There are no rules around what the pattern should look like
Interesting. Pattern suggests "repeated or regular way in which something happens or is done"

So theoretically repeated or regular equals more than once, but there are no rules on this.

I also ask because a regular build up of surplus income from a discounted gift trust and other sources (pensions, dividends etc) presents as a possible opportunity for surplus income transfer. It is surplus in that has been siphoned to a savings account and is clearly unused. If this income was further reallocated to a third party, limiting IHT liability, "more than once" then it would be a pattern and therefore acceptable?

Are there any flaws in this logic to readers, and more importantly HMRC.

AGoodman
Posts: 881
Joined: Fri May 16, 2014 3:47 pm

Re: Gifts from Surplus Income

Postby AGoodman » Tue Dec 03, 2019 4:13 pm

Yes, that's exactly how it can/should be used.

"Surplus" has the specific meaning that the donor has income in excess of their outgoings so, provided they have that excess, they can make "regular" gifts.

"Regular" can (in theory) include a single gift provided the donor (or more likely the donor's executors) can demonstrate an intent to make more of them. An annual basis is also fine.


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