Normal expenditure out of income exemption (again!!)
Jona
Member
Client with 7 grandkids.
To the GKs they gift £1K when age 18 attained, £5K at 21 and £50K after they reach 25 (and buy a house).
Assuming the gifts at age 18 and 21 are met from income (and £3K annual exemption used elsewhere); would these be classed normal and habitual and thus attract immediate exemption under the normal expenditure out of income rules.
I am thinking yes - the only nagging point is that there is an obvious end point to this series of gifts..... not sure that has an impact on exemption qualification though....?
Ta
Comments
Yes, they do.
There is no requirement for expenditure to be ongoing; it needs to be a settled pattern. That pattern can have an end point.
The gifts you suggest are of a settled pattern at outset. Bennett v IRC [1995] In summing up Lightman J said "What is necessary and sufficient is that the evidence should manifest the substantial conformity of each payment with an established pattern of expenditure by the individual concerned - a pattern established by proof of the existence of a prior commitment or resolution or by reference only to a sequence of payments."
This case is also referred to in the IHT Manual in Section 14244.