Readers’ forum: Determining disposable income

I act on behalf of a client whose estate will be liable to inheritance tax; consequently we are looking at how this might be minimised. The client has more than enough income for their personal requirements and it seems that making gifts out of disposable income would be possible. My question concerns the determination of a taxpayer’s disposable income.

Page 8 of HMRC’s form IHT403 (tinyurl.com/y9ooxrcw) is helpful in establishing disposable income and then maintaining a record of this across several years. One subheading on page 8 in the types of income section is ‘investments’ but no further detail is provided. Clearly this is expected to include investment income such as dividends but no mention is made of capital gains. Given that the thrust of the legislation is to tax any diminution of the estate I wonder whether capital gains should be...