Paying someone else's mortgage from savings

Mojisola

gran_in_space wrote: »

If we paid off a close relatives mortgage ...under £15,000... so they can give up work to care for us on a when needed basis, would there be any tax implications for my other half who is a tax payer though doesn't receive tax form to complete?

C_Mababejive wrote: »

Anyway does at £15k mortgage really need paying off? Its a trifling amount.

Why pay it off in a lump sum?

You could pay your relative for the care he/she provides for you and they can use the money to pay the mortgage.

You won't be liable for any claims of deprivation of assets because you will have been paying for care, not giving money away.

If the arrangement falls down, you will still have money to pay for care from someone else and your relative can look for another job.

C_Mababejive

This whole idea is fraught with issues. I would stay well clear and hang on to your 15k.

Malthusian

C_Mababejive wrote: »

Im no expert but keeping it simple and as a general rule, you should not put any money into a property without some kind of registered interest in it be that via a listing as a proprietor at HM Land reg or via some kind of deed of trust/agreement.

If you dont do that, well you may as well open the window and let the recent brisk winds carry it away.

Agreed with that part - but the OP may well be happy for it to disappear on the wind if she truly means it to be a gift. That's what a gift means.

If it's intended to be a down payment for future care services then it's a very different matter.

Anyway does at £15k mortgage really need paying off? Its a trifling amount.

If I give you my bank details will you send me £15,000? No? Not that trifling then. It must mean something to both the OP and the recipient.

teddysmum

If you pay the relative for care and they have another income (eg pension) they could be liable for income tax and NI if they have over a certain income and are not age exempt.


I have a feeling that employing someone directly (ie not via an agency) to care for you, your house or a child, new legislation makes you an employer and liable to provide holiday pay, sickness benefit etc. There was a case in the media, where someone was no longer required by a couple, as the person with most problems died and the other decided that they could manage alone. The old man was taken to court as he didn't offer a redundancy package.


Would it not be better to pay a neutral agency for care,or possibly go into a care home on a temporary basis,if help is only needed now and then ? When the money goes below the set level (£23000+ at the moment), the council will begin to help you pay until you have just over £14000, when they will give full rate help.

C_Mababejive

Apart from the financial issues, iwould not like to be dependant on/ in thrall to anyone. When the £15k changes hands, what guarantee is there that they will deliver what is agreed? Come to think of it, what IS agreed? and further, how could you obligate them to it? It is nothing more than a casual agreement with the OP being the loser if and when it all goes wrong. £15k wouldnt pay a wage for a carer for even one year.

gran_in_space

Thanks for the further replies, nice to have a mix of opinions so we can consider them.


Firstly may I assure you that the money we WANT to give is to help the person out in a few ways. The job they have now is not conducive to their health so it would alleviate our worries about that for a start knowing the person doesn't HAVE to work in that environment to pay the mortgage.


If we paid it off monthly, the debt would still be there (how ever trifling it is!) so the full pay off would set the process in motion sooner. Regarding if the person "delivers" what is (verbally) agreed, I can assure you that I trust this person with my life and always have done. There is no way they would renege on this so we have no concerns there.


We do not wish to have a legal right by any means to the property. If we gave them the same money as a gift to do what they like with we wouldn't want to direct them in any way. However it was stated the mortgage would be paid off so the person could give up work and we know for sure that will be done.


The only concerns we now have is this "Deprivation of Capital". However if we bought a car instead or took several holidays THEN needed care/benefits, the outcome would be the same as I see it. They could still deem it Deprivation of Capital. I think it's a gamble but only in that direction, not with the person we would be gifting the money to. I think "Malthusian" 15th Feb 17, 5:10 PM has it spot on. Many thanks for everyone's help.

bowlhead99

gran_in_space wrote: »

The only concerns we now have is this "Deprivation of Capital". However if we bought a car instead or took several holidays THEN needed care/benefits, the outcome would be the same as I see it. They could still deem it Deprivation of Capital.

Re deprivation of capital - you're allowed to buy a car that you need or want. You are getting something for your money and are not being "deprived" of anything, even if it's a bit reckless to buy a car if you don't need one.

What you're not allowed to do is give a pile of cash to someone and then say to the council "oops, I don't have any cash, please can you pay my costs of living"

So you can get a car no problem. But buying a car for someone else, or just giving cash to someone else, depriving you of your capital which you could reasonably foresee would be needed to live on, is dodgy.

As mentioned, just giving gifts WITHOUT intention of then being able to claim benefits as a result of your reduced asset base is not illegal. It is just the sort of thing that might open you up to scrutiny if the time before giving money away and then needing a hand out, is not long. Being scrutinised does not send you to jail or make you definitely need to foot a bill you can't afford. The person doing the means testing would still have to prove that a reasonable person would see you as deliberately depriving yourself in order to get a benefits gain.

xylophone

Do you need care at the moment?

Has the prospective donee suggested that if you paid off his mortgage, he would give up work to care for you?

If he gave up work, he would still have bills and expenses - would you be covering these as well on an ongoing basis?

What about his pension provision?

gran_in_space

Hi bowlhead99 thanks I do get the point of what you're saying. Our intention IF we ever have to claim anything would be not to do so UNTIL we have used our capital to live on if we had to. There is no way we would ask for state help until we have spent our own money for living expenses, we couldn't do that. Hoping of course it wouldn't come to that but it's something we would definitely do whether we had gifted money or not. Whether that is right or wrong I don't know but it's not in our nature to seek benefits if we can pay for ourselves.

gran_in_space

Hi xylophone....

The care we 'need' is what the person is doing for us now but finding difficult at times with their job, occasional hosp/docs appointments, shopping, taking out occasionally. No housework unless there's something difficult to do or move which is rare. Of course this could change in the future we don't know but they would be there for that. There are things I wouldn't ask for from strangers re this care for personal reasons but would only ask of our close relative.

I have stated they definitely want to give up work to be free to care for us when needed as now things are difficult for them whilst working. This person is married and partner works so there is another income for living expenses, we would not be covering any of their living expenses. We just want to help them out and by doing so leave the person free if and when we need them. Think I stated reasons in my post at 3:52 Thursday .