Herald - Issue 413

Page 56 • The HERALD • 7th October 2021 v THE HERALD - Proud to be part of your community v ASK A PROFESSIONAL Building Plans & Estimating Building Plans for Planning & Building Regulation approval Builders Estimating Service Free initial meeting and estimate CAD drawings produced on latest software Please call Bob on 07795 692060 Email abbott.bob@sky.com Making Inheritance Gifts from Surplus Income by Michael Osman, Oyster Financial Planning Are you making use of this useful and much under- utilised exemption? If you want to make inheritance gi s from surplus income, there is a useful and not very well-known exemption that allows gi s over and above the value of £3,000 per annum to be made without these gi s forming part of your estate if you die within seven years of making them. It is a particularly valuable way of gi ing part of your estate to future generations on a regular basis. If you want to make inheritance gi s from surplus or excess income, you need to show that you intend to make regular gi s that will not a ect your normal standard of living, and that it will come from income rather than capital. is form of giving is most e ective for those with higher incomes relative to their cost of living, who are either looking to clear their estate or just make gi s to loved ones. SO, WHAT ARE THE RULES? 1. e gi must form part of your normal expenditure – this can mean either a pattern of regular gi s or the intention to make regular gi s. You therefore need to record when you are making a gi out of income, by writing a letter for instance 2. e gi is made from income 3. You are le with enough income to maintain your normal standard of living 4. Consider how much net income you receive a er tax Inadvertently making a gi of capital could be very costly and later give rise to a 40% Inheritance Tax charge on those funds should you die within seven years It’s important to keep nancial records that allow you to calculate and o set expenditure against income if you are going to follow this path To discuss this further and understand the investment opportunities this creates for your loved ones please do get in touch on: 023 8084 8410 or pop in for a chat opposite Lloyds Bank in Hythe. Michael Osman