Senior Product Specialist
Andrew joined Keyridge Asset Management in 2015 and directly supports the portfolio managers with implementable ideas and support for the management of the multi asset range.
He has over 15 years' experience in financial services dealing with intermediaries, institutions and high net worth clients. Andrew is also a CFA Charterholder.
Why gift surplus income to your family?
Utilising an income fund with steady targeted dividend payments may help in estate planning. Many retirees and high-net-worth individuals find they have more income than they need for their own living expenses. Instead of letting that surplus accumulate (and ultimately inflate their taxable estate), a savvy strategy may be to gift that excess income regularly to family. This guide explores this option in depth.
At a glance:
HMRC’s rules on gifting through regular income and how to ensure that clients’ gifts meet the ‘normal expenditure out of income’ rule
Find out how to implement a regular gifting plan
Guidance on choosing a suitable income fund
Case study: making gifting through income work in practice
Read the full guide.
What’s special about gifting surplus income?
Under HMRC’s rules, ‘normal expenditure out of income’ is an often-overlooked exemption that, if done correctly, means these gifts are immediately outside of the client’s estate for IHT – no seven-year wait, no using up their annual gift allowance. In other words, gifts that qualify under this rule are entirely IHT-free from day one. This is incredibly powerful for estate planning: it prevents an IHT problem from arising or getting worse. Compared to one-off large gifts (which generally take seven years to fully escape IHT), regular gifts from surplus income offer a more certain and HMRC-approved solution.