IHTM14234 - Normal expenditure out of income: practice

It is important that you have all the facts before you decide whether a gift will qualify for the exemption. It is up to the taxpayer or agent to provide you with enough evidence to show that on the balance of probabilities the conditions are satisfied.

The information you need to obtain will include:

• details of all gifts made over a representative period
• details of the deceased’s net income in the relevant years
• details of the deceased’s usual living expenses for the relevant years

Once you have all the facts, you should be able to accept or refuse the exemption in accordance with the guidance in the following pages.

In borderline cases you should give the taxpayer the benefit of any reasonable doubt.

You must allow the exemption first on a purely factual basis without regard to any other exemption.

If the taxpayer disagrees with your position, or you need guidance on any aspect, consult Technical at an early stage.