Carers tax

[Deleted User]

ljayljay said:

Thanks, yes I am aware of Carers Allowance & do receive the NI credit that can be awarded for 20 hours care but don't do enough hours for the allowance.
I have never heard of this 'income in your hands' term before reading this thread. Can you provide a link to explain when/how this applies in relation to taxation matters? 

It was just a phrase used by another poster. While not wishing to speak for him I am sure that he was trying to reassure the op that, while the income is received, it is not regarded as income for tax purposes - and it isn’t. As I said earlier, if you would rather see the money as a gift there are no implications in that scenario either.

Jeremy535897

ljayljay said:

Thanks, yes I am aware of Carers Allowance & do receive the NI credit that can be awarded for 20 hours care but don't do enough hours for the allowance.
I have never heard of this 'income in your hands' term before reading this thread. Can you provide a link to explain when/how this applies in relation to taxation matters? 

What it means is that even regular payments from a person to a close relative caring for them do not become taxable income just because they would be taxable in the hands of an employed unrelated carer doing it for a living.

Skibunny40

One other thing to consider - as POA you must act in the best financial interests of your mother. I'm not saying that your mother "gifting" you a set amount each month isn't in her best financial interests (if anything, it gives her excellent care) but is there anyone else that might argue the case? perhaps a sibling who's concerned about losing out on inheritance? Hopefully not an issue for you, but something to be aware of as a potential problem.

ljayljay

Jeremy535897 said:

What it means is that even regular payments from a person to a close relative caring for them do not become taxable income just because they would be taxable in the hands of an employed unrelated carer doing it for a living.

Whilst I appreciate what you are saying as it appears to make common sense I have still not seen any official clarification that the tax office would see it the same way when it involves receiving 'payment' for helping family. I appreciate there are ways around this, in the same way that there is nothing stopping anyone from gifting money to others, apart from deprivation of assets for social care/benefits & IHT.

However, the situation talked about here is where a parent specifically rewards you for undertaking care duties for them. In these circumstances I do not see why the tax office would differentiate between whether they are a close relative or an unrelated carer doing it for a living, especially if payments could accrue to several thousand over the course of a year.

My mother & siblings (NB none of which live locally) are proposing that she pays me out of her excess income as partial recompense for my loss of earnings for leaving my job to care for her. The amount of care she requires would be unaffordable at the £25/£30 per hour charged by care agencies & also nowhere near as comprehensive as the care I can provide, especially at short notice.

Obviusly if I was able to accept payments as suggested it would be beneficial for all concerned but am still to be convinced that the tax office would see it the same way. However, I would love to be proved wrong & would welcome any actual specific experiences or documents that definitively proove that these payments are not subject to tax.

Jeremy535897

The guidance below deals with Court of Protection authorised payments from a person to a carer relative, and such payments are not taxable. It would be absurd if similar payments without the involvement of the Court of Protection were taxable.

The points made as to why there is no taxable employment or trade include:

• there is no enforceable contract of employment
• there is no "gainful employment"
• there is no trade or commercial activity

https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm4016

HMRC have far better things to do than look into every domestic carer's position to see if they can take a bit of tax.

ljayljay

Thankyou that appears to clear it up....much appreciated.