I have done more or less exactly the same thing and have a detailed spreadsheet showing all my various incomes, expenditures etc and a column showing all my gifts over the last 10 years (10K each Xmas to each of my two children).

I wish I knew of instances where someone has done this successfully (and unsuccessfully!).

In particular, unsuccessful ones would be particularly pertinent so that one could modify their records to satisfy HMRC.

Thanks very much. The recent mention of this generated a lightbulb moment for me - we have been doing this for a few years, but I hadn't even considered the fact that dividend income being paid into our ISAs and GIAs, nor indeed from VCTs would qualify.
On reflection, it seems if not obvious, then certainly likely, but I hadn't got beyond income from pensions and (then) BTL.

it probably won't affect the amount we are gifting, but inclusion of these income streams will certainly increase the buffer between excess and gifted.

I'd be interested to hear of any practical experience of how things panned out after death. A report from beyond the grave may be a little too much to ask, but maybe third party info.?

Anyway, i've learnt already, so thanks.

We have just finished probate for my father in law who ' informally' gave gifts up to 60k in aggregate from his judgement of surplus income. No formal statement of intent and gift amounts varied. HMRC have accepted our computations but filling out the form going back over the relevant years was tedious and needed access to bank statements and bills.
Thought we might get more pushback but there you go. His income was about double the gifted amount.

Thank you for your comment.
It confirms what I have suspected - that if the scheme is reasonable you can get it past HMRC, but it will make things much easier if you leave documentary evidence for your executers and beneficiaries.

About ten years ago I became LPA (Lasting Power of Attorney) for each of my parents. It was clear that a plan was needed to limit the growth in capital and to also distribute excess income. So, I proposed a plan to them which involved: annual exempt gifts, gifts from income and potentially exempt transfers (PETs).

Sadly my father died within a couple of years. However, I did the administration of his will which was relatively simple (my mother being his sole beneficiary). So I had to complete the IHT403 forms and process. It was all relatively straightforward (this doesn't necessarily mean simple!). I apportioned joint household expenses 50:50 until my father was admitted to a home (apportioned 0:100 after that). I added a note to the IHT403 submission to HMRC and they were satisfied. Up to about 99% of his excess income was gifted and HMRC did not object to anything. So, if you are honest and reasonable, then I don't think you should have a problem.

What I have been doing every since for my mother is:
1. I complete her self-assessment so I have all income details. I also have an extra sheet in her Excel workbook for 'untaxed income' (ISAs etc). There is a separate Excel workbook for each tax year.

2. I replicated the form on IHT403, page 6, (Gifts from Income) in a separate spreadsheet which is has draft figures for the current tax year and 'final' figures after submission of her self-assessment. There is a separate spreadsheet for each year to capture the details of expenditure in more detail, particularly utility bills etc which then feeds the summary sheet. For things like supermarket expenditure (food, household consumables etc. I just allocate a monthly amount). As long as its reasonable/believable I think you will be OK.

3. I also replicated the form on page 3 of IHT403 (Gifts made within the 7 years before death) in a spreadsheet. This is where annual exempt gifts and PETs are declared. Gifts from Income are also declared here (I declare them exempt as such in column B)

4. I create a written declaration to HMRC (signed by my mother) at the end of each tax year stating the amount of gifts given from income and to whom they were made and the recipient's relation to the giver (they are family members). It also states that it is my mother's intention to continue this practice for future years. I hold this on file.

It is the IHT403 form upon which you are judged by HMRC, so I calculate/record everything around that.

Like most things (SIPP/Drawdown planning etc.) if you create a framework and a process to plan and then keep records it's not too onerous - you simply update the spreadsheets etc each 3/6/12 months as is appropriate to your circumstances.
HTH