Gifts out of pension income

My pension advisor says that drawdown income from pensions is classed as capital not income and does not qualify to be used for gifts out of income for IHT purposes even though it is subject to income tax. I have read different reports about this with some saying It does and others saying it is only income from defined benefits pensions that count not income from defined contribution pensions. How do I get correct advise?

Hi
You would need to clarify tha twith the Inheritance Tax Department on 0300 123 1072.

I tried that and unfortunately HMRC are not willing to give advice unless dealing with a dead persons estate

Hello, Is there going to be any follow up on this as I would be interested to hear HMRC's views on this as there is much conflicting information on their manuals and guidance and other sites. thanks 

Name removed admin .

Hi Katriona McEwan,

There are no income tax implications on the giving of or receipt of a cash gift unless the cash gift generates interest or dividends.
These would then potentially be subject to tax.  Further guidance can be found here (Tax on savings interest andTax on dividends).  
You may wish to consider inheritance tax implications where the cash gifts exceed £3000.00 in a tax year.  
(How Inheritance Tax works: thresholds, rules and allowances).  


Thank yout.

Can regular monthly savings from excess income be saved for 12 months then given as a lump sum

Hi,

Yes. You shoud consider the inheritance tax implications relating to your estate.  

Inheritance Tax

Thank you.