Gifts made before death: records to collect

Lifetime gift records help an estate adviser assess whether a transfer affects Inheritance Tax. A bank withdrawal alone does not establish who received a gift, why it was made or whether the donor continued to benefit from it.

Record the transaction and its context

List the date, recipient, asset or amount and any supporting document. Separate outright gifts from loans, repayments, shared household expenditure and transfers into trust. Record outstanding loan balances rather than relabelling them as gifts after death.

HMRC's gift guidance explains exemptions, the significance of timing and gifts where a benefit is retained. ^[1] Do not assume every transfer older than seven years can be ignored without considering the arrangement and relevant tax rules.

Support an exemption with evidence

If regular payments may qualify as normal expenditure out of income, preserve income and expenditure records showing the pattern and the donor's remaining resources. Labelling a standing order 'gift' does not establish all the conditions.

For property given away while the donor continued living there, record occupation and any rent arrangements for advice. Inheritance Tax records connects the gift history to reporting; foreign estate assets is relevant where a gift involved overseas property or another country's tax rules.

Ask about transfers without leading the answer Use a neutral request when asking relatives for information. Ask what changed hands, when, why and on what understanding, rather than asking them to confirm that a payment was exempt. People may describe a contribution towards a deposit as a gift although repayment was expected if the property was sold. Keep messages, bank references and any written agreement together. If accounts differ, record both versions and the evidence supporting each, so the tax adviser can assess the actual arrangement rather than an agreed family label.

Include non-cash transfers in the enquiry. Jewellery, shares, land and an interest sold at an undervalue may be relevant even though no large outgoing payment appears in the bank records. Identify the asset transferred, the consideration received and any valuation available at the time. A later estimate should state its date and assumptions. HMRC's gift guidance includes transfers where an asset is sold for less than its worth, so a transaction described as a sale may still need examination for the value given away. ^[1]

Build a chronology that handles uncertainty Place each transfer on a dated schedule with a separate field for the evidence of completion. A promise, a signed document and an eventual bank transfer may have different dates. Ask which date matters for the particular tax analysis instead of choosing the earliest available date because it produces a preferred outcome. Where records are incomplete, mark an approximate date honestly and identify the steps being taken to establish it. Preserve the original sequence when several payments formed part of one wider arrangement.

Review records across tax years rather than applying an annual allowance independently to every recipient. A donor may have made several transfers through different accounts, and family members may each know about only their own payment. Gather the combined picture before allocating any exemption. Keep earlier calculations visible if later evidence changes the amount available. Avoid describing taper relief as a discount on every gift's value: its relevance depends on the overall tax calculation. An adviser needs the transfer history before explaining whether a relief changes any liability.

Examine what the donor continued to enjoy For transferred property, record who occupied it afterwards, who paid the outgoings and whether rent was charged and actually paid. For a gifted investment or valuable object, ask who received income or continued to use it. Retain agreements and payment evidence without assuming that a written arrangement was followed in practice. A transfer can require further consideration where the donor retained a benefit. The passage of seven years should therefore not be used as the sole reason to discard the documentation for a continuing arrangement.

Regular support from income needs a different evidence bundle. Assemble income records, normal household expenditure and a payment history showing the pattern of support. Distinguish income from withdrawals of accumulated capital. A recurring standing order helps establish regularity but does not establish every condition for the proposed treatment. If income varied or the donor's care costs increased, show that change in the records. The adviser can then assess the position in context instead of relying on a single year's surplus or a general statement that the donor could afford the payments.

Connect the recipient's account with the estate file Ask recipients to confirm factual details and supply available evidence, making clear which uncertainties remain. Do not ask them to sign a statement containing tax conclusions they cannot verify. If a recipient may have a separate reporting or payment responsibility, direct that question to the tax adviser rather than promising that the estate will always bear the cost. Keep sensitive financial material within the authorised administration team. The final schedule should allow each transfer to be followed from its original record to the treatment used in the estate's tax work, including any later correction.

For gifts made from a joint account, identify who was intended to make the transfer and the evidence of ownership of the funds. The account mandate alone may not explain whose transfer should appear in the lifetime history.