My question boils down to
'are realised net capital gains treated as capital or income for giving to my children as part of excess income
Any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax. These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle.
Although Keith is quite right about this being an exempt gift if any f your children are due to marry in the near future, as you were asking about regular gifts and what constituted "monies" that could fall into that remit, that was what was provided.
However just in case you wanted more scope for consideration(although I am sure you are aware of these other options) I have provided a full list of exempt gifts - I have added a link here for you from HMRC website
Do let me know if you wish any clarification/further information on these exemptions
Thanks for the link, which I had already seen. I would suggest that a good strategy if you reduced your assets down to the IHT threshold over 7 years ago, but they keep growing faster than the IHT limit and you do not expect to live more than say 7 years is to just give it away and bank on taper relief helping out.
Thanks for your response
I assumed you were already aware of the IHT exemption for gifts, and were just seeking clarification on what constituted the remit of regular gifts.
I agree with you totally regarding the taper relief which does go some way to helping the final position on the estate for IHT purposes whilst allowing you to give away what you wish to now.
Additionally I have used my PEPs to buy annuities which creates excess income I can give away. If I had not done this they would have attracted IHT. The income tax I pay on the annuities is minimal
Charity begins at home and I would never ever give money to political parties
Apologies, I know you didn't but it is on the list of exemptions and no guesses as to why the law-makers put it there! All the more reason not to give them anything.