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The art of giving

21 February 2012 / Mark McLaughlin CTA (Fellow)
Issue: 4342 / Categories: Comment & Analysis , Inheritance Tax
MARK MCLAUGHLIN highlights the importance of the inheritance tax exemption for normal expenditure out of income


  • Rules contained in IHTA 1984 s 21.
  • Care in their application.
  • What is normal income?
  • Use of power of attorney.
  • Reporting gifts on IHT100.

It is probably fair to say that the tax system in this country is not known for its generous provisions and it is definitely not known for its simplicity.

However the exemption from inheritance tax for normal expenditure out of income (IHTA 1984 s 21) is exceedingly generous particularly because there is no statutory limit in monetary terms.

The exemption is effectively only restricted by the transferor’s personal circumstances and to the extent that the donor’s gifts satisfy certain conditions.

The normal expenditure out of income exemption is relatively well known and yet is...

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