financial implications of paying rent/sharing living costs with elderly parent

Keep_pedalling

Lover_of_Lycra said:

getmore4less said:

People living as a single households share the costs all the time without counting the pennies and asking HMRC if it is OK.

Just because people don’t ask HMRC if something is ok doesn’t mean HMRC shares that view. 

Gifts from income do actually need to be declared to HMRC but not until the giver dies. Anyone contemplating this needs to keep meticulous records of both gifts and income otherwise their poor executor is going to have a nightmare trawling through 7 years of bank accounts or not being able to claim the exemption.

The info required is contained in sections 20-22 of IHT 403

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/917890/IHT403-05-20.pdf

Mojisola

Lover_of_Lycra said:

getmore4less said:

People living as a single households share the costs all the time without counting the pennies and asking HMRC if it is OK.

Just because people don’t ask HMRC if something is ok doesn’t mean HMRC shares that view. 

Are there any examples of the HMRC investigating family members contributing to a household's bills?

[Deleted User]

Mojisola said:

Lover_of_Lycra said:

getmore4less said:

People living as a single households share the costs all the time without counting the pennies and asking HMRC if it is OK.

Just because people don’t ask HMRC if something is ok doesn’t mean HMRC shares that view. 

Are there any examples of the HMRC investigating family members contributing to a household's bills?

Perhaps you missed my post where I said in practice most parents/family members would either be under the RAR allowance or if using income minus expenses would come out with a profit of next to nothing so no tax would be due. In any case we're not talking about a contribution to household bills we are talking about rent over and above a person's share of the household bills.

There's nothing in HMRC's manuals about family members being exempt.

lucypilates

elsien said:

Is the annexe self contained, or just a bedroom/en-suite? 

Also not what you’re asking but has she made power of attorney for both finances and health/ welfare? 

Annexe is self contained but accessible from the kitchen of the main house - we intend to share the main kitchen really as her little kitchen is tiny but she can use it if she wants to be a bit quieter for a while.

Yes,, I have lasting poa set up but not activated yet.

lucypilates

maman said:

I'd agree with getting professional advice but I do think posting online can be valuable. It raises all sorts of questions and 'what ifs' to ask the advisor at the appointment. IMO it's a bit like thinking aloud and helps to plan. 

absolutely right!! I'm after discussion more than anything - opening up the areas that i need to consider - rather than advice that i will blindly follow .. all these comments have been so helpful and i'm gaining awareness of various aspects i hadn't considered before. :-) thank you all and keep the ideas coming

maman

One thing that often comes up in similar threads is deprivation of assets should your mother ever need residential care. Briefly, this is when an elderly person gives away large amounts of their assets and then wants to claim financial support with residential care. From what you've said I don't think that would be a concern for you as the money she's planning to pay you is living expenses (which she'd have to pay wherever she lived)  and you talked of buying in care if needed  so the issue is unlikely to come up for some considerable time, if ever.  Just something you might want to be aware of. 🤔

Savvy_Sue

68ComebackSpecial said:

Though your mother is desperate for you not to work full time is she aware that your current income is already markedly less than hers? If you reduce your hours will you have sufficient income - not only now but in the future when you will be in retirement? 

This: plus think about the 'what if' questions. How old are you now, how much longer might your mum live (independently or otherwise?) Would you want / need / expect to return to f/t work at that point? How easy would that be?

pollypenny

It's wanting you to give up or cut down work which bothers me. You are clearly close, but it sounds as if mother will depend on you for company and her social life.  You need one if your own, as well as your independence, pension etc. 

lucypilates

pollypenny said:

It's wanting you to give up or cut down work which bothers me. You are clearly close, but it sounds as if mother will depend on you for company and her social life.  You need one if your own, as well as your independence, pension etc. 

Thanks for this - yes this is very much an issue in my mind too. I think a lot of the issue is actually in my own head and I'm working on setting my boundaries - Mum understands that i need to work for financial and also for my own well-being as being stuck at home would be very depressing for me. I dont think she likes it but she understands it and won't make demands  on me ... but you know when you look at a sad puppy and how that feels? well that!! So that's my issue and i just need to keep those boundaries - in time, I'm sure she will settle into her new life, spending time with the family in the home but also enjoying her own time with her friends or not - as she chooses.