gifting cash to family

annsixty I also spend what I wish. DH earned it and we are enjoying spending on AC and GC!

I now intend to spend as much in cash as I need. Otherwise what we have saved for our retirement could go in care fees. I have no problem in my H's entire pension going in fees (not true!!) but if I can spend it on what I can I will.

Exactly, anyone can dump cash here and there. And I'd say most do.

Really?
I am hanging on to the little I have apart from the odd gift here and there

annsixty "Therefore inheritance tax can be just as easily be misinterpreted."

Join the "spend it while you're still able to have fun" group.

I can't think of one reason to scrimp and save any longer.

My H has a simple financial situation, always employed,never had to fill in a tax return. Retired on a pension for over twenty years, no complex affairs and now a letter yesterday saying he owes £660 in unpaid taxes. Sorry to digress but we are lost. It would seem to be HMRC who had made a booboo as we have not submitted any figures. Therefore inheritance tax can be just as easily be misinterpreted.

Elegran do you really have to put that on your tax return?

Exactly. Too poor...

If you don't have to complete a tax return, you are unlikely to come above the level where you would be paying inheritance tax on the gifts.

Elegran, not everyone has to complete a tax return! (I don't - why would I, the taxman knows all about my income already, I don't have investments etc.)

Rigby46 "Now for example,say I'm widowed and merrily giveaway £1k here, £2k there £4K here and so on. Then after about four years I die. How would person doing probate know what on earth I'd given away as gifts?"

Exactly, anyone can dump cash here and there. And I'd say most do.

You would have stated the gifts on your tax return. There is a question asking whether you have given any gifts.

You should keep a list of gifts and dates given. Any that are over seven years old when you die are discounted. This is only of significance if you leave over the IHT limit. This enables your executor to do the job accurately and honestly

As my H and I live a very simple and not "going out" type of life we have income to spare,so we choose to help our family. We do not go without anything and why should we not be able to share without it being included in our estate. Factually we won't leave enough to be penalized. Would it be included in the event of my H needed care which is a probability.

Now for example,say I'm widowed and merrily giveaway £1k here, £2k there £4K here and so on. Then after about four years I die. How would person doing probate know what on earth I'd given away as gifts? It's mad I tell you mad

Thanks madmumofboys. We have been discussing that issue recently. We've decided to give our young adult grandchildren gifts such as driving lessons so they get a bit of help now, rather than in the (we hope) more distant future.

Thanks everyone for input. Very informative.

That sums it up nicely Mumofmadboys

BBbevan "We give a fixed sum every month to cover GDs dance classes, music lessons etc. How is this perceived?"

I do the same, but I do use cash that doesn't show in my ACs accounts or mine. No real reason, but nobody need explain mum's sums in their accounts.

I think small sums are perceived as smidgen gifts, like Birthdays.

Jalima "The money has probably been taxed once already though Norah"

Yes there have probably been taxes paid, already. I'm sure.

These taxes are on excess, as has been pointed out. I see it as leveling the playing field, redistribution.

The money has probably been taxed once already though Norah

That is reassuring MOMB sometimes not having very much gives you fewer money worries than those who have a lot.

If your estate is under the inheritance tax limit of 325K if you are single and 650 K if you are married ( even if spouse had already died) when you die gifts over the last seven years have to be declared but if the total is less than amounts given above no IHT is payable.

We give a fixed sum every month to cover GDs dance classes, music lessons etc. How is this perceived ?

The 7 yr rule is to ensure we all pay a fair share of taxes.

This discussion is exactly why I think IHT should be abolished - there are so many ways round it that can go undected if you know what you are doing. And anyway, why the 7 year rule? Basically if you can afford to give any money away and it would benefit someone you care about, then just do it.