Claiming tax relief on care payments

Brick18

My father died last year. He was primary carer for my Mum, who has Parkinson's disease. Although some of his pensions did pass over to her, it is not enough to cover her care needs. She requires around the clock support and can't survive without it. In order to pay for her care we have had to regularly transfer money from bonds that had been set up in her name into her account. We are lucky to have these, but we think we will run out of money in less than a year. My concern is that I understand my Mum will have to pay tax on the money transferred into her account from the bonds, even though the money is only used to pay for the care bills. Is this correct and is there any way we can offset the care bills against tax, to buy her some more time before she has to sell the home? We don't employ the carers directly, but go through a care agency instead.

Thanks for any advice.

Dazed_and_C0nfused

My concern is that I understand my Mum will have to pay tax on the money transferred into her account from the bonds,

What is your source for this understanding?

xylophone

My concern is that I understand my Mum will have to pay tax on the money transferred into her account from the bonds, even though the money is only used to pay for the care bills.

What exactly are these "bonds"?

For example, are they some sort of fixed rate bond from a building society on which she receives monthly interest?

If so, and the amount in  question is higher than can be covered by her Personal Allowance/starting rate for savings/ Savings Allowance then she will pay tax - it is immaterial that it is being used for care.

And if the interest were paid into an account which also paid interest then that income would also be taxable.

If you mean some form of insurance company bond, then see here re taxhttps://www.moneyadviceservice.org.uk/en/articles/investment-bonds

Has your mother been assessed for Continuing Care?

https://www.nhs.uk/conditions/social-care-and-support-guide/money-work-and-benefits/nhs-continuing-healthcare/

If she is not eligible and she has insufficient capital/income to pay for care, then selling her property to cover her fees may become necessary.

An Immediate Needs Care Annuity might be considered - the income from this is paid tax free to the Care Home.

https://forums.moneysavingexpert.com/discussion/5894044/immediate-needs-annuity-question

https://www.moneyadviceservice.org.uk/en/articles/immediate-needs-annuity

whizzywoo

Is your Mother claiming any disability benefits as you haven't mentioned them.

Attendance Allowance if she is over State Pension age or PIP if under.  Neither of them are means tested.

jennifernil

It sounds to me like Mum is receiving care in her own home, if this is the case, how can she be forced to sell her home?

whizzywoo

OP has not been back since asking the question 3 days ago.

xylophone

It sounds to me like Mum is receiving care in her own home, if this is the case, how can she be forced to sell her home?

She needs 24 hour care - this is not cheap.

Her pension income plus (presumably) higher rate AA is currently being supplemented by interest/capital but is only just covering the wage bill for the carers.

It seems that this will only be possible for a few more months.

It seems that the sale of the property to cover nursing home fees will then be required.

Brick18

Thanks for all the replies.

I am not sure what the bonds are but they don't seem fixed rate. They were set up by my parents financial advisor before my father died. it was the financial advisor who said my Mum would have to pay tax on the money we took from them.

My Mum is being assessed for continuing care, although there doesn't seem a lot of clarity over what she is eligible for. People in general have been very helpful, but it has been difficult working out what support she can access and what she can't.

I will look into an Immediate Needs Care Annuity, thanks for the suggestion.

Xylophone was correct in what they said, Mum is at home and we pay for care at home but the money will run out soon(ish) and we will be forced to sell the home if we want to cover the care costs.

It is a difficult situation that a lot of people are in and we are lucky to have the bonds to rely on for now, I was simply surprised that we would have to pay tax on money we are releasing from investments with the sole aim of paying for care and nothing else. As a lot of people will know, the costs of care are high but without it my Mum would not survive long.

I imagine ours is not an unusual situation.

Thanks again