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IHT planning...what have you done?

Practical Issues
Eboli
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Re: IHT planning...what have you done?

#475365

Postby Eboli » January 22nd, 2022, 4:56 pm

Lootman,

More generally despite the dismissive attempts of both you and genou, who are both accountants...

I have never been an accountant in my life. I have drafted for Parliamentary Draughtsmen; I have looked out onto the Thames over Waterloo Bridge from the New Wing; I have written advice for both sides in Finance Bill Committee Stage (on the floor or in Standing Committee). I have lectured to accountants and I would never sneer at them as you have done. I have served on advisory Tax Committees from the CBI down. I am long retired and thanks to many of the ideas of L'Universal have all and more than I could ever want.
Meaning that you want us to feel scared of GWROB, POAT...

How can I possibly want that? It is so blatantly obvious you understand neither. Thus there would be an existential problem that has to be overcome first if I were to want that. But I assure you I don't.
you should ... dismiss it and hide behind your "professional" status.

I have no professional status, whatever that may be. Nor do I hide, or at least no more than others here hide behind their nom de plume. But clearly, for whatever reasons, you chose to misunderstand me, which matters not, and the law, which does matter, and rely upon the law not being executed because of (mainly) the acute lack of trained staff.

Basta! Enough, already, so soon!

Eb.

scrumpyjack
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Re: IHT planning...what have you done?

#475378

Postby scrumpyjack » January 22nd, 2022, 5:32 pm

Clearly the letter of the law does matter and must be respected. I would certainly not wish to break it simply because there was thought to be a good chance one would get away with it. There was an occasion many years ago when I had a very large capital gain that I was offered a 'scheme' to avoid CGT on it. I declined as I thought in principle one should not try artificially to avoid a tax liability and because I thought HMRC might subsequently try to contest it no matter how confident the promoters were. So I have no sympathy for those who have gone down that route and got into trouble (including those who engaged in those payroll/loan schemes).

Having said that, the first port of call, to check how HMRC will treat something, is to look at their manuals even though, as I understand it, there are things in their rules that have no statutory basis.

In the POAT case it seems clear to me that the section of the 2004 Finance Act that I quoted does provide a legal basis for the view that if a parent gives his child cash and then occupies a house that child bought, POAT does not apply as long as at least 7 years elapsed before occupation.

Lootman
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Re: IHT planning...what have you done?

#475385

Postby Lootman » January 22nd, 2022, 5:43 pm

Eboli wrote:
Meaning that you want us to feel scared of GWROB, POAT...

How can I possibly want that? It is so blatantly obvious you understand neither.

Leaving aside the rather nasty tone there, I do understand. POAT applies at the time of a gift and ONLY if a benefit is retained or reserved. That is fundamental. In the example being considered there is NO retention or reservation at the time of the gift and so a POAT declaration would quite simply never be made. POAT is irrelevant to this situation.

Then IF, decades later, I started to enjoy some unforeseen and unintended benefit from the asset then it would be only GWROB that MIGHT apply, and that would be a matter for my executor and not for me.

Notwithstanding your otherwise impressive list of credentials in this area, I am frankly at a loss to understand why you would disagree with the above. It now seems that you were more involved with the theory of this stuff rather than the practice of it, and I suppose that might explain the anomaly.

Nor do I understand why you are upset that there can be genuine differences of opinion here. The OP appears to have long gone but I imagine he/she would appreciate that there is a vigorous debate on the subject. Rather than have a single self-styled "expert" try and impose his opinion on the community.

I stand by the advice that myself, Dod, Scrumpyjack and MyNameisurl have all explained here.

scrumpyjack wrote:Having said that, the first port of call, to check how HMRC will treat something, is to look at their manuals even though, as I understand it, there are things in their rules that have no statutory basis.

It also comes down to how well these things have been written. The texts that have been cited so far will never win a Plain English award, and the opacity of the writing leaves the situation open to interpretation and opinion, as we have seen on this thread.

What matters ultimately is not the text but rather how aggressive the taxman might try and pin the POAT issue on situations where it was never originally intended to apply, such as the OP's idea here. And I have no reason to believe that the taxman takes that view. This situation is far from any elaborate avoidance "scheme" which is what POAT was designed to target.

yorkshirelad1
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Re: IHT planning...what have you done?

#475440

Postby yorkshirelad1 » January 22nd, 2022, 9:45 pm

yorkshirelad1 wrote:+1. Keep it simple. Do you want to saddle your inheritors with a load of hassle (& potentially fees)?

Personal investment companies seem to be in vogue, but you can be sure as soon as some "good wheeze" comes along, there'll be a clamp down on them. BPR used to be a thing (so people started looking at AIM companies, which has its own hazards in relation to BPR) but that's not guaranteed into the future and it's getting tightened up.
In my experience, nothing is forever, so for example Potentially Exempt Transfers (gifts over 7 years) even get eyed up by Chancellors periodically, so you have to be on the ball, and don't expect your good idea now still to be available in 10 or 15 years, and the current IHT effectiveness of pensions and passing on the pot (noting LTA rules which could change) are probably in the firing line too.
IANAL


Useful article in this week's (Fri 21 Jan 2022) edition of Investors Chronicle on Family investment companies
https://www.investorschronicle.co.uk/ideas/2022/01/20/tax-efficient-distributions-via-family-investment-companies/
also via Google: https://www.google.co.uk/search?q=%22investors+chronicle%22+%22family+investment+companies%22

genou
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Re: IHT planning...what have you done?

#475447

Postby genou » January 22nd, 2022, 10:16 pm

Lootman wrote:More generally despite the dismissive attempts of both you and genou, who are both accountants it would seem


For clarity, I am not now, nor have I ever been, an accountant. At one time I earned a crust as a tax inspector and then a tax advisor. But I haven't been paid for tax work for over 30 years. I have no axe to grind here at all.

Lootman wrote: I do understand. POAT applies at the time of a gift and ONLY if a benefit is retained or reserved.


No.

Lootman
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Re: IHT planning...what have you done?

#475529

Postby Lootman » January 23rd, 2022, 12:19 pm

genou wrote:
Lootman wrote:POAT applies at the time of a gift and ONLY if a benefit is retained or reserved.

No.

Let me rephrase. GWROB and POAT are similar in that they both target people who try to lower their IHT liability by evacuating their net worth and estate. They both mention 7 years as an important period of time.

A difference is that GWROB is primarily about intent. Even if I never directly benefit from a donated asset, if I reserved a right to benefit from it in the future then the 7 year clock doesn't start ticking at the point of the gift. And unless I revoke that reservation it never starts ticking.

Whereas POAT is about actually benefiting from the asset, even if that was never intended. And as long as I never actually benefit from the asset then POAT is an irrelevance.

Another difference is that GWROB is a determination made by an executor after the donor has died. Whereas a POAT liability happens contemporaneously with the enjoyment of the benefit. It can be nullified by paying a market rent for the benefit (in which case presumably the current owner of that asset may owe income tax if he is liable for UK income tax). There are various other exclusions as cited upthread.

Where it gets messy, and probably the source of much of the disagreement in this topic, is that these rules are not widely understood, followed or enforced. Which means that in many cases there are no declarations made about the original gift OR any reservations of benefits OR any actual benefit derived from the asset. And since gifts do not have to be reported to the taxman whilst a donor is alive, the taxman is highly reliant on the taxpayer for declaring things that the average taxpayer would not think need reporting.

In fact I would speculate that the number of POAT declarations made in a year is remarkably low. And I read that in many cases a POAT liability is only determined after the donor has died. It is very tempting for a taxpayer to just leave all these complications to the executor, who may be unaware of a history going back decades.

And for whatever reason the taxman doesn't seem to care too much, perhaps because the POAT charge due is not usually a lot of money, or perhaps because it is just too difficult for them to discover and determine such liabilities.

Happier now?

RockRabbit
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Re: IHT planning...what have you done?

#475549

Postby RockRabbit » January 23rd, 2022, 1:35 pm

yorkshirelad1 wrote:Useful article in this week's (Fri 21 Jan 2022) edition of Investors Chronicle on Family investment companies
https://www.investorschronicle.co.uk/ideas/2022/01/20/tax-efficient-distributions-via-family-investment-companies/
also via Google: https://www.google.co.uk/search?q=%22investors+chronicle%22+%22family+investment+companies%22

Family investment companies look very complicated to get right, expensive to run and carry the significant risk that future legislative changes will undermine their intended tax benefits. I would avoid unless very rich.

I was involved in the winding up of a family trust a few years back. Trusts were the must have IHT planning tool back in the day but were subsequently penalised by changes in legislation. The Trust was quite substantial in size, but as far as I could tell all the income had been used up in paying the annual fees of the accountants, lawyers and investment managers.Winding up the Trust took 2 years and significant expense due to the complexity of the legislation and getting the lawyers and accountants to work together effectively and agree on the law/procedure. Again all very expensive and stressful. I would go down the keep it simple route whenever possible.

yorkshirelad1
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Re: IHT planning...what have you done?

#475642

Postby yorkshirelad1 » January 23rd, 2022, 10:02 pm

RockRabbit wrote:
yorkshirelad1 wrote:Useful article in this week's (Fri 21 Jan 2022) edition of Investors Chronicle on Family investment companies
https://www.investorschronicle.co.uk/ideas/2022/01/20/tax-efficient-distributions-via-family-investment-companies/
also via Google: https://www.google.co.uk/search?q=%22investors+chronicle%22+%22family+investment+companies%22

Family investment companies look very complicated to get right, expensive to run and carry the significant risk that future legislative changes will undermine their intended tax benefits. I would avoid unless very rich.

I was involved in the winding up of a family trust a few years back. Trusts were the must have IHT planning tool back in the day but were subsequently penalised by changes in legislation. The Trust was quite substantial in size, but as far as I could tell all the income had been used up in paying the annual fees of the accountants, lawyers and investment managers.Winding up the Trust took 2 years and significant expense due to the complexity of the legislation and getting the lawyers and accountants to work together effectively and agree on the law/procedure. Again all very expensive and stressful. I would go down the keep it simple route whenever possible.


I would tend to agree with you. I posted the article not as any sort of recommendatoin but becuase there was an article on FICs and they had popped up in the thread elsewhere. I wouldn't go near them: as you say, bread and butter for solicitors and accountants. I've also dissolved several trusts: as you say, back in the day, they were the thing to have, but IMHO they have been made very unattractive by the rise in taxes and the substantial professional fees that most people would need.

flyer61
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Re: IHT planning...what have you done?

#475676

Postby flyer61 » January 24th, 2022, 9:41 am

The OP is still here. Thanks for all the replies, which I have been reading diligently. i certainly get and understand the KISS principal and will continue to try and embrace it. Both my wife and I are very mindful of keeping our children's 'noses to the grindstone'. As an immigrant who arrived with a few hundred quid to my name I don't see why they shouldn't 'have to make the effort', particularly as if they worked out what they are likely to get down the line they might opt for a lifestyle that neither my wife or I would be happy with. Thankfully they are all gainfully employed. It is still my intention to morph our family Company into an investment Company of sorts. If I can keep control, save the kids IHT and run the Company off my ipad all the better. That is not possible...yet.

genou
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Re: IHT planning...what have you done?

#475782

Postby genou » January 24th, 2022, 3:28 pm

Lootman wrote:
genou wrote:
Lootman wrote:POAT applies at the time of a gift and ONLY if a benefit is retained or reserved.

No.

Let me rephrase.....

Happier now?


Pretty much got it this time around. You do realise that this version contradicts most, if not all (I'm not going to wade through it all again ) , of what you claimed the law to be in earlier posts?

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Re: IHT planning...what have you done?

#475796

Postby Charlottesquare » January 24th, 2022, 4:39 pm

Lootman wrote:
Eboli wrote: I can't be bothered non curat lex. I have better things to do.

Maybe you do have better things to do. But then, here you are . . .

And by the way the full phrase you are quoting there is "de minimis non curat lex". In other words the courts (and the taxman) do not concern themselves with trivial infractions.

More generally despite the dismissive attempts of both you and genou, who are both accountants it would seem, to disparage real-life practical experience, I think you miss the broader point here. TLF, and TMF before it, are predicated on the idea that the average Joe is smarter than the "professionals" who, in many ways, have their own self-serving agendas.

Meaning that you want us to feel scared of GWROB, POAT and the like because it implies we should pay you to immunise ourselves from that risk. But as many of us with practical real-life experience have explained, that risk is exaggerated and mostly irrelevant to the everyday situations that we find ourselves in.

This debate and disagreement is healthy, is just what TLF is about, and you should welcome it rather than dismiss it and hide behind your "professional" status.


A lot of clients had their own interpretation of the law when I was in practice (not that I dealt with IHT), whilst you may consider professionals are out to fleece you, scare you, in reality they are normally trying to protect you from yourself.

A little knowledge in any professional field can be dangerous, the unknown unknowns can bite.

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Re: IHT planning...what have you done?

#475800

Postby Charlottesquare » January 24th, 2022, 4:44 pm

flyer61 wrote:The OP is still here. Thanks for all the replies, which I have been reading diligently. i certainly get and understand the KISS principal and will continue to try and embrace it. Both my wife and I are very mindful of keeping our children's 'noses to the grindstone'. As an immigrant who arrived with a few hundred quid to my name I don't see why they shouldn't 'have to make the effort', particularly as if they worked out what they are likely to get down the line they might opt for a lifestyle that neither my wife or I would be happy with. Thankfully they are all gainfully employed. It is still my intention to morph our family Company into an investment Company of sorts. If I can keep control, save the kids IHT and run the Company off my ipad all the better. That is not possible...yet.


Freezer shares may be worth looking into re the family company but I would not try to structure share ownership for IHT/CGT using them without very sound professional advice. (For one thing because at least if it is wrong you may be able to sue someone)

Catch is a few on this thread prefer their own interpretations of the law, I must try that in my life, service the jet I am about to fly on or remove my own appendix.

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Re: IHT planning...what have you done?

#476027

Postby MyNameIsUrl » January 25th, 2022, 2:24 pm

Charlottesquare wrote:…a few on this thread prefer their own interpretations of the law…


I don’t know if I’m one of the people you’re referring to, but for the record I am meticulous about sticking to the law, and one of the reasons for joining these discussions is to try to understand exactly how it applies to me.

When explaining what I understand to be true as it applies to a real situation I am likely to face, I do try to frame it as hypothetical, with liberal use of phrases such as: if I'd made the gift…, I would have expected to…, the implication…seems to be…, I presume…, …it's hard to see how…, as far as I can see…

Sometimes the most straightforward way to test if my understanding is correct is to make a statement of a proposed course of action. It’s therefore very useful to me when I get an authoritative response such as ‘Sorry, you would be wrong to do so’ (Eboli) as that is crystal clear and I can then investigate further and avoid making serious mistakes

So, apologies if I’ve led anyone to believe I’m advocating fiddling tax. I’m not, I’m painstakingly careful about getting it right, and threads such as this one help me much more than simply reading HMRC manuals could ever do.

Lootman
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Re: IHT planning...what have you done?

#476107

Postby Lootman » January 25th, 2022, 5:05 pm

MyNameIsUrl wrote:
Charlottesquare wrote:…a few on this thread prefer their own interpretations of the law…

I don’t know if I’m one of the people you’re referring to, but for the record I am meticulous about sticking to the law, and one of the reasons for joining these discussions is to try to understand exactly how it applies to me.

When explaining what I understand to be true as it applies to a real situation I am likely to face, I do try to frame it as hypothetical, with liberal use of phrases such as: if I'd made the gift…, I would have expected to…, the implication…seems to be…, I presume…, …it's hard to see how…, as far as I can see…

Sometimes the most straightforward way to test if my understanding is correct is to make a statement of a proposed course of action. It’s therefore very useful to me when I get an authoritative response such as ‘Sorry, you would be wrong to do so’ (Eboli) as that is crystal clear and I can then investigate further and avoid making serious mistakes

So, apologies if I’ve led anyone to believe I’m advocating fiddling tax. I’m not, I’m painstakingly careful about getting it right, and threads such as this one help me much more than simply reading HMRC manuals could ever do.

Yes, these are theoretical discussions. Anyone up to real mischief is unlikely to talk about it. Like you I am impeccable with my tax affairs. I use an experienced accountant both to prepare my tax returns and to advise on IHT planning (the topic here, lest we forget). Not cheap but worth it as my accountant often finds exemptions or allowances that I can benefit from but was not aware of, thereby saving me money whilst taking no risk. Sometimes I talk to my accountant about ideas expressed here, and sometimes I talk here about things my accountant has advised. That further develops my knowledge and my confidence in that knowledge. I also annually report my gifts to my accountant which is not required but helpful to keep things documented.

Based on what I have learned, also like you, I do from time to time describe here possible strategies both because I believe that may be effective and to test out their viability. This topic is an interesting one because it seems to be one of those areas where there are genuine differences of opinion amongst folks who have knowledge and experience in this area. As a result we all learn from each other and as a consequence we all reach a point of greater awareness of options and risks.

That said I do not find a response like "you would be wrong to do so" to be authoritative. It sounds rather judgemental and moralistic. I prefer an analysis of any risks of a proposed strategy so that I can refine it. In this case the commentary confirms my view that gifts are best made in cash as it is far more unlikely that a case could ever be made that I enjoyed any subsequent benefit. And of course I am conscious not to benefit from such gifts, to sidestep the risk entirely.

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Re: IHT planning...what have you done?

#476113

Postby RockRabbit » January 25th, 2022, 5:23 pm

Charlottesquare wrote:Catch is a few on this thread prefer their own interpretations of the law...

I can say with absolute certainty that the precise meaning of law is sometimes subject to disputed interpretation due to either the way the legislation has been drafted and/or due to the fact that the legal drafting has failed to take into account certain specific circumstances. Therefore there is often debate as to what a specific legal clause means and/or in which circumstances it applies. Furthermore the 'accepted' interpretation can sometimes even change over time.

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Re: IHT planning...what have you done?

#476155

Postby scrumpyjack » January 25th, 2022, 7:12 pm

RockRabbit wrote:
Charlottesquare wrote:Catch is a few on this thread prefer their own interpretations of the law...

I can say with absolute certainty that the precise meaning of law is sometimes subject to disputed interpretation due to either the way the legislation has been drafted and/or due to the fact that the legal drafting has failed to take into account certain specific circumstances. Therefore there is often debate as to what a specific legal clause means and/or in which circumstances it applies. Furthermore the 'accepted' interpretation can sometimes even change over time.


Absolutely, which is why looking at the Inland Revenue's manuals is a good starting point because they indicate what HMRC's interpretation of the law is.

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Re: IHT planning...what have you done?

#476454

Postby Charlottesquare » January 27th, 2022, 8:16 am

scrumpyjack wrote:
RockRabbit wrote:
Charlottesquare wrote:Catch is a few on this thread prefer their own interpretations of the law...

I can say with absolute certainty that the precise meaning of law is sometimes subject to disputed interpretation due to either the way the legislation has been drafted and/or due to the fact that the legal drafting has failed to take into account certain specific circumstances. Therefore there is often debate as to what a specific legal clause means and/or in which circumstances it applies. Furthermore the 'accepted' interpretation can sometimes even change over time.


Absolutely, which is why looking at the Inland Revenue's manuals is a good starting point because they indicate what HMRC's interpretation of the law is.


HMRC manuals are fine providing they do not so shape your interpretation that the correct interpretation from statute and case law then cannot get a fair hearing.

taken2often
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Re: IHT planning...what have you done?

#478835

Postby taken2often » February 5th, 2022, 11:32 pm

The answer to the last question is joint liability. The Executor would have to pay. There is a question in the IHT400 asking if you have the agreement from the beneficeries to deal with HMRC.

As it happens I have just completed my IHT400 for about the 8th time. This was the best one yet, by studying the process more deeply I have saved the estate around 100k. One of the previous questions related to Private Limted Companies. There is two choices that give exemptions depending on your circumstances Business or Unlisted shares by controlling shareholders, a seperate one for agriculture. I have a company where I own 100% of the shares so I can claim the whole value of the company. You of course need confirmation of valuation.

Each year I carry out this exercise for two reasons make it easy for the Executor and save a bundle of money. Until you carry this out you have no idea the amount of work involved just on the research going back 7 years. If you cannot be bothered to do the whole thing at least do the IHT403 form every year. Gifts and proof of Income and Expenditure. Gifts 3,000 per year. 250 as small gifts to as many people as you like. Gifts out of income which must be monthly as much as you like. Remember Income changes to capital on the 6th April. You need to prove the excess income, that is why record keeping is crucial. I have seven spreadsheets showing my monthy expenditure and Hargreaves give me great reports on income from ISA and Taxable shares.

I now have marked box files 1-7 for each year various statements, banks building societies, credit cards etc. Any document that may be required.

If you decide to do a IHT 400. This is crucial print of the form. Decide on what Schedules you need. Print off the ninty odd pages of guidance.
The first job is to fill out the Schedules, open the guidance relating to that schedule work them both at the same time. When they are done you then have the information to fill out the IHT400. You can then work out how much IHT is due you will also have much more knowledge of the the exemptions remember knowledge is power. The effect on me was to change from a saver to a spender, every pound spent 40p saved.

I do not have children but the only gift I would give them would be out of income every month into their SIPP. Up to 2,800 every year plus a goverment contribution to bring it up to £3,500 you cannot beat that, and it is also protected.

Bob

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Re: IHT planning...what have you done?

#478882

Postby ursaminortaur » February 6th, 2022, 11:08 am

taken2often wrote:The answer to the last question is joint liability. The Executor would have to pay. There is a question in the IHT400 asking if you have the agreement from the beneficeries to deal with HMRC.

As it happens I have just completed my IHT400 for about the 8th time. This was the best one yet, by studying the process more deeply I have saved the estate around 100k. One of the previous questions related to Private Limted Companies. There is two choices that give exemptions depending on your circumstances Business or Unlisted shares by controlling shareholders, a seperate one for agriculture. I have a company where I own 100% of the shares so I can claim the whole value of the company. You of course need confirmation of valuation.

Each year I carry out this exercise for two reasons make it easy for the Executor and save a bundle of money. Until you carry this out you have no idea the amount of work involved just on the research going back 7 years. If you cannot be bothered to do the whole thing at least do the IHT403 form every year. Gifts and proof of Income and Expenditure. Gifts 3,000 per year. 250 as small gifts to as many people as you like. Gifts out of income which must be monthly as much as you like. Remember Income changes to capital on the 6th April. You need to prove the excess income, that is why record keeping is crucial. I have seven spreadsheets showing my monthy expenditure and Hargreaves give me great reports on income from ISA and Taxable shares.


There isn't a hard and fast rule as to when accumulated income becomes capital however HMRC generally considers it capital after two years.
Gifts out of income could be given yearly rather than monthly so long as a regular pattern is either established or the intention for that is established (obviously doing it monthly allows the firm establishment of that regular gifting earlier but as I said a pattern of yearly giving would be just as good).

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14250

Income from earlier years does not retain its character as income indefinitely. At some point it becomes capital but there are no hard and fast rules about when this point is. If there is no evidence to the contrary, we consider that income becomes capital after a period of two years. Evidence to the contrary could impact either way as income:

may immediately be invested in a capital product and become capital or
may be retained as income for more than two years with a specific purpose in mind.

Each case will depend on its own facts but, in general, the longer the period of accumulation, the more likely it is that the income has become capital. However, this is not the only factor to consider. You will also need to look at how the accumulation has been made and the transferor’s actions (or inaction) in accumulating it.

Often the taxpayer will try and claim that the exemption applies on gifts made out of several years of accumulated income, which you should deny. But this is a contentious area and you should seek the advice of Technical before becoming entrenched.

If a gift is made out of a current account you only need to check that the gift could have been made out of income. You do not need to match the gift to specific money in the account.


https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14242

There is no set time span over which the taxpayer must show the pattern of giving. A reasonable span would normally be three to four years. However, you can consider a longer period if this helps the taxpayer to illustrate the gifts were ‘normal’ (IHTM14243).

A pattern is more difficult to identify where a single gift is involved - particularly if this is made close to the date of death. The taxpayer or agent must provide strong evidence in such cases that the gift was genuinely intended to be the first in a pattern and that there was a realistic expectation that further payments would be made. If a single gift is also said to be made from accumulated income rather than the available income of the year in which it was made you should refer the case to Technical.

A single gift by way of payment under a deed of covenant or other regular commitment, such as payment of the first of a series of premiums on a life policy may be accepted as normal. On the other hand there may be an indication that the gifts were never intended to continue from the outset.

For example:

Some life policies provide that after payment of the first premium the policy may be converted into a fully paid one.
A policy may also be taken out when the transferor’s expectation of life was very short.

In either of these cases, any gifts could not be regarded as normal expenditure.
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Example

In the four years before his death, Peter made gifts from his income of £1,000 to each of his three children on their respective birthdays and £500 to each child at Christmas. He also paid regular monthly premiums of £100 into a life policy written in trust for the benefit of his wife. In the same period, he gave his eldest child £20,000 to pay off her debts and gifted 5000 shares, representing a 50% interest in a company, to his sister who already held the other 50% interest.

The birthday and Christmas gifts form a pattern of giving as do the life policy premiums, so these are exempt. The one-off gift of cash to the eldest child is not exempt as it does not fall within a pattern. The gift of shares is not exempt as it is a gift of a capital asset and also not part of a pattern of giving.

scrumpyjack
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Re: IHT planning...what have you done?

#478885

Postby scrumpyjack » February 6th, 2022, 11:19 am

For several years I have had a monthly standing order to my daughter and keep a spreadsheet to demonstrate that this is well covered by the 'out of income' exemption. I put a print out of this in the pack of info 'for my executors' which my daughter is aware of and knows where it is. I let my pension funds roll up untouched as far as possible, having registered wishes with Hargreaves Lansdown. I am not subject to the LTA as I opted for enhanced protection when it was introduced. Also I have given substantial amounts to my children and grandchildren. Beyond that I don't intend to worry too much about inheritance tax - at least, at present anyway, dying avoids capital gains tax :D


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