And Yet Another Gifting Question

[RGG]

A hypothetical question

Person A has a monthly pension of circa 4K and expenses of 1K

Hypothetically, that person is unlikely to survive for 7 years

Person A wants to gift on a monthly continuous basis equal amounts to siblings B & C, the sum of 1K to each of those siblings - 2K in total

How would this plan sit with HMRC, IHT and acceptable gifting?

[PM3]

A decent simple write up of the situation and guidance to ensure answer is a yes

https://www.gabyhardwicke.co.uk/briefing-notes-and...

[ spelling edit ]

Edited by PM3 on Sunday 22 February 12:46

[TwigtheWonderkid]

Gifting regular monthly amount of unused monthly income is completely free of any tax and falls outside of IHT in all respects. The 7 year rule doesn't apply.

My IFA tells me he has a very wealthy client that's been giving £2500/month each to all 3 of his daughters for the last 25 years. When he dies, the £630K that's been received by them over the last 7 years won't count for the purposes of IHT.

But you need to keep good records to show monthly income and how you had money left over.

[ChrisH72]

If its gifts out of surplus income do you even declare it on IHT403? I filled it in fairly recently and can't remember a section for such gifts, not that I was aware of any.

I think as above, you'd need to keep statements and accurate records. It would be up to the executor to prove that these gifts were exempt if HMRC decided to investigate.

[The Leaper]

ChrisH72 said:

If its gifts out of surplus income do you even declare it on IHT403? I filled it in fairly recently and can't remember a section for such gifts, not that I was aware of any.

I think as above, you'd need to keep statements and accurate records. It would be up to the executor to prove that these gifts were exempt if HMRC decided to investigate.

See IHT403 parts 20-22. Details of income sources, expenditure details, income, surplus and regular gifting over the past seven years is required to be reported.

R.

[OIC]

If you did this with the state pension could you avoid paying 40% tax on the SP income, or reclaim the tax and gift that as well?

[omniflow]

OIC said:

If you did this with the state pension could you avoid paying 40% tax on the SP income, or reclaim the tax and gift that as well?

I'm not sure I fully understand this question.

Are you asking whether or not you can give away your state pension and as a result not pay any income tax on the state pension - which is part of your overall income?

The topic of gifting is all about avoiding IHT - not income tax.

[YouWhatAgain]

OIC said:

If you did this with the state pension could you avoid paying 40% tax on the SP income, or reclaim the tax and gift that as well?

No

[OIC]

Drat and double drat.

How about slapping the SP money into a SIPP, claiming the 40% tax back and then waiting for PM Farage to reverse the RFA raid on SIPPs, which will be part of your estate for IHT from sometime soon?

Then the kids can get all of my SP tax free by killing me.

If only I'd negotiated my own personal bespoke, somehow legal (feck knows how), essentially crooked pension deal like a certain Mr Starmer.

Man of the people.

[mikef]

I was advised to keep an IHT403 updated with latest figures and let the family know where the data is, which is what I’ve been doing for years, just in case

[OddCat]

OIC said:

Drat and double drat.

How about slapping the SP money into a SIPP, claiming the 40% tax back and then waiting for PM Farage to reverse the RFA raid on SIPPs, which will be part of your estate for IHT from sometime soon?

Then the kids can get all of my SP tax free by killing me.

If only I'd negotiated my own personal bespoke, somehow legal (feck knows how), essentially crooked pension deal like a certain Mr Starmer.

Man of the people.

Only if you have other non State Pension earned income that itself is greater than the amount of the State Pension.

[RGG]

Thanks for the replies and advice.

One question; can the monthly gifting be legitimately backdated in any way?

[mikef]

Take a look at the IHT403 form for the records you'll need to keep to demonstrate that gifts are from your excess income within a tax year

https://assets.publishing.service.gov.uk/media/5f6...

[The Leaper]

RGG said:

Thanks for the replies and advice.

One question; can the monthly gifting be legitimately backdated in any way?

Regular monthly gifting out of excess income means just that, so maybe some initial backdating by a lump sum will not qualify. However, if all is in the same first tax year of gifting out of excess income, it may be OK. You need to check this out.

I do regular gifting out of my excess income. I have form IHT403 all set up, so I update the information required by HMRC on a regular basis, much easier for my executors when the time comes. And they know where the form is along with all other relevant personal stuff.

R.

[alscar]

[quote=The Leaper

I do regular gifting out of my excess income. I have form IHT403 all set up, so I update the information required by HMRC on a regular basis, much easier for my executors when the time comes. And they know where the form is along with all other relevant personal stuff.

R.
[/quote]

Likewise whenever I have given lump sums to my 3 adult children ( in particular by using the TFC from a pension ) I have kept copies of the bank transfer/s.
As the Executor’s of our estates one day they will be grateful that I’m being so thoughtful !

[mikef]

Coincidentally a Telegraph article on "the most valuable inheritance tax form you'll ever fill in" (IHT403, although they manage to mis-spell that)

I'm not sure whether the Apple News link only works for subscribers...

https://apple.news/AR_IqG7A4TGu5xbCbpbHk_A

If you're searching the paper's own site, the article is by Rachel Wait, published 24 February 2026 02:10pm GMT

[RGG]

Thanks to everyone offering their views.

We've set up regular surplus income payments which have gone down a treat, as expected and the donor is happy too.

[clarkey]

This is a genuine question, but how does anyone know if you have gifted money, regularly or otherwise? If no records are kept how is it discovered on your death? I know the executor has an obligation to report it, but what if they don't know?

[alscar]

clarkey said:

This is a genuine question, but how does anyone know if you have gifted money, regularly or otherwise? If no records are kept how is it discovered on your death? I know the executor has an obligation to report it, but what if they don't know?

Executors have that duty to do as much "research " as they can into what may have been gifted previously.
Bank and other Building Society etc records over the last 7 years should be easily available - cash gifts somewhat harder obviously to record unless sizeable withdrawals which will also be worthy of note.
Ultimately if no records can be found then all the Executors can do is say that they have searched to the best of their ability etc.
However failure of said Executors to identify and report even if a genuine error can still result in the Executor being held personally liable for any unpaid IHT.

[alscar]

Sorry meant to add that if you are an Executor ( and that in itself isn't something to be accepted lightly ) it might be very worthwhile in talking with the donor well in advance of their death just to check that they are keeping records ?!