Introduction to this document

Surplus income record

There is an inheritance tax exemption for monetary gifts made out of your surplus income.The exemption relies heavily on identifying the amount of surplus income you have. A simple annual record can be used for this purpose.

Gifts from income

There is no financial ceiling or percentage restriction which might otherwise limit the amount you could give away. Any money expended on gifts out of surplus income is in addition to the annual exempt amount of £3,000 and other exemptions.

If you decide to go down this route, you should make a record of your income and outgoings in sufficient detail to evidence the surplus income. Complete our Surplus Income Record each tax year so that the executors will be able to rebuff any challenge from HMRC over gifts made out of your income and write a letter recording your intentions. (Keep all of this with your will and record of gifts.)