Inheritance Tax

sheramber

What do you mean by your brother was given carer's allowance?

Any money you take out of the estate reduces the final amount to split among the beneficiaries so if you were able to claim anything , say £1000 the estate is reduced by £1000 therefore the beneficiaries each get less and you get an additional amount of £1000

IHT is paid on any excess over the nil rate band so by reducing the estate to avoid IHT you reduce the amount of money left in the estate.

£325,000 no IHT so estate is £325,000

£350.000 IHT on £25000 so estate is £350,000 - £10,000 = £340,000

agrinnall

Keep_pedalling wrote: »

The POA ceased on the OPs brothers death, it cannot be used retrospectively. While it was in effect the OP could only charge for actual expenses not time, unless the donor had stated otherwise.

You may well be right, but if it was me I'd still want to check with the OPG rather then rely on what someone on the internet has said...

ZZaffy

When my Brother started getting sick he was given about £70 per week to hire help and support. But Brother would not have outside help so I and another member of the family did everything for him so money was going into Brother's bank account but very little came out. Brother died.
Now, we think inheritance tax will go slightly over the threshold. If I can invoice the estate for either his care or petrol then at least that little bit would not incur inheritance tax.
Example. I did the one-to-one night care shift in the care home for 3/4 weeks. The journey was a 35mile round trip. I did not charge my Brother for my time or for the petrol or bits and pieces and was happy not to do so. But now I find I have paid out for these things keeping Brother's bank account filling up just so the tax man can inherit it. I repeat, if I am recompensed that extra money will be shared between us. Maybe I have just got the wrong end of the stick. The will is in probate and funeral charges will need to be deducted, but not much else. I just wondered if I could put a bill in too.

getmore4less

Brothers benefits belong to the estate.
(eg PIP,AA etc)

If you were claiming carers allowance, if you gave that to the brother then there may be a debt against the estate.

Any other payment for care to you would be taxable income.

ZZaffy

I did not claim carer's allowance or anything. I just looked after my Brother. Now that he has died can I put in a bill for caring for him so that the IHT threshold becomes lower. I a not sure how else I can explain. Brother was given a carer's payment each week but he did not use it for anything. We shopped for him. Sister cut his hair. We took him where he needed to go because we cared for him.

sheramber

People are assuming you mean the carers allowance from the DWP.

I think you mean you want to charge your brother, through his estate, for the service you gave him as his sister.

I don't think any body here can answer that. You would need to consult the Office of Public Guardian and/or a solicitor.

Linton

What has IHT got to do with it? If you believe you should be paid for your services surely that either stands or falls on its own merits. Any IHT affect is incidental.

You are proposing that the beneficiaries agree that the estate should pay you for the services but then having reduced IHT you will pay the money back to the other beneficiaries. This is hardly compatible with you having a strong belief that you should be recompensed. The whole idea seems more like tax fraud to me. If you can do this for presumably no more than a small number of £K at the most why cant someone else play the same game with £100Ks? And if it is just for a few £K and the estate is liable for IHT the £s involved are surely relatively trivial.

If you want to be paid for work done presumably you will provide an itemised invoice. Will you use an hourly rate? On what basis? Do you have a list of the hours? You will of course declare the income to HMRC for income tax.

It seems to me that if you wanted this to be the basis on which you cared for your brother you should have agreed it at the start, not as an afterthought.

happyandcontented

I think calling it tax fraud is rather harsh. I can see where the OP is coming from. If she had known what was going to happen re the refund of monies paid incorrectly and how that would impact the IHT threshold of the estate, then I am sure she would have considered her position before now.

It seems to me that she should at least try to mitigate (not defraud) the tax burden by invoicing for her considerable care especially considering her brother was claiming for that care but not paying anyone else for it.

In her place, I suspect most of us would consider doing a similar thing. She is a pensioner so unlikely to be overly flush with cash. Ditto her siblings. Why pay more tax than necessary?

Op, I would simply tell whoever or say so on the relevant form ( I don't know what the process is) that during the caring period you had neither the time nor the will to sit down and quantify your caring charges, but that you feel now that you should do so as your brother had expressed a wish that you use the allowance as payment for your services rather than pay an outsider.

You may not be allowed to do so but you lose nothing by trying. Ignore those who say it is fraud, it is tax avoidance imo which is perfectly legal as you did carry out the duties you would be claiming for. It would be entirely different had that not been the case.

getmore4less

it would help if you used the proper terms for the benefits your brother received, as you had POA you should know these finances inside out.

if the care costs are getting paid(refunded) that my have effect on the benefits that were claimable it may be that there is a rfund due on those(back to the state)