Spending capital

amarshall · January 2020

Retired clients in their early 70s.

He has guaranteed pension income of £110k, she has guaranteed pension income of £10k.

Their accountant has suggested that they should put all capital (circa £2.0m) in her name and spend only from her accounts whilst he gifts his (entire?) income to children/grandchildren/trust.

A quick Cashflow analysis shows it is affordable to age 93 but it could easily be tinkered with to make the capital last longer.

Can anyone see HMRC buying this or will they see it for what it is? Everything that I have read on gifting as part of normal expenditure out of income only seems to look at it from the perspective of an individual.

Thanks

Andy

arongunningham · January 2020

Why do they need to move things into her name? Why can't they spend the capital when it's in his name?

amarshall · January 2020

@arongunningham said:
Why do they need to move things into her name? Why can't they spend the capital when it's in his name?

Because you can't spend capital and then gift your income and it not count as a gift for iht purposes.

https://www.canadalife.co.uk/adviser/ican-academy/briefing-notes/estate-planning-trusts/gifting-as-part-of-normal-expenditure-out-of-income

Nathan · January 2020

Not sure if this helps?

Spending capital

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