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Gifts out of Surplus Income - Carry Forward

Practical Issues
edwills46
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Gifts out of Surplus Income - Carry Forward

#399443

Postby edwills46 » March 27th, 2021, 10:38 am

I've seen that one can carry forward surplus income for two years before it is considered capital so far as giving gifts out of surplus income and avoiding inheritance tax is concerned. I am going to try to maximise the amount I give, which may expose me to going over in the (any) current tax year unless I use previous years' residual excesses.
This is the third year of this activity and in both previous years I had a few thousand left after completing all my records, some time after the tax year in question.
Am I allowed to consider the first part of this year's gift to be from my excess from 2018-19 and the next part of it to be from 2019-20?
If I'm allowed to do this on an ongoing basis, I can be prudent with my gift calculation for the current year, leaving a theoretical comfort amount to give in the next year?
I already use the 3K allowance.
Ed

Gengulphus
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Re: Gifts out of Surplus Income - Carry Forward

#399607

Postby Gengulphus » March 27th, 2021, 7:06 pm

The general subject of the 'regular gifts out of surplus income' IHT exemption was explored only a couple of weeks ago in viewtopic.php?f=49&t=28187, so I'd suggest you take a look at that thread and the various links it contains (which include at least one previous thread on the issue, HMRC links, articles by tax experts, etc) and then coming back either in that thread or this one if they don't answer your questions. Or convince you that there simply isn't a hard-and-fast answer - a lot of this area of IHT is resolved by what HMRC will agree is reasonable, on the basis of general principles HMRC have used in the past, rather than precise 'this is allowed, that isn't' rules. And a good deal more of it is a matter of remembering that it's your executors who will have to deal with HMRC on the issue, not you, so that it's a good idea to make the case your executors have to argue as straightforward as possible.

By the way, I'm not suggesting that you ought to have found that thread yourself - it's far from obvious that "Does this Qualify as Capital Expenditure" is a thread about the 'regular gifts out of surplus income' IHT exemption!

Gengulphus


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