Medical costs

pzizz15
pzizz15 Forumite Posts: 5
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If someone pays for somebodys medical treatment abroad, but dies within 7 years, does this count as a gift for inheritance tax purposes?

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  • Grumpy_chap
    Grumpy_chap Forumite Posts: 13,213
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    pzizz15 said:
    If someone pays for somebodys medical treatment abroad, but dies within 7 years, does this count as a gift for inheritance tax purposes?
    I would say "yes, it does".
    It's no different to simply gifting the cash and then the individual (recipient) paying the medical costs.

    It may be moot - is the estate of sufficient size as to be liable for IHT?
  • Jeremy535897
    Jeremy535897 Forumite Posts: 10,243
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    I assume that "someone" is not the same person as "somebody", and that "somebody" is not the spouse, civil partner or minor child of "someone"?

    Gifts are not subject to inheritance tax, but if the donor dies within seven years of making a gift that is not exempt, the gift is treated as still forming part of the donor's estate for inheritance tax purposes. If the total amount of non-exempt gifts (failed PETs) made within the seven years before the donor's death is within the nil rate band, no tax arises on the failed PETs, but there will be more tax on the estate, assuming, as Grumpy points out, that the estate is sufficient to exceed the remainder of the nil rate bands available.
  • silvercar
    silvercar Forumite, Ambassador Posts: 45,962
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    edited 15 June at 8:51AM
    Presumably the "abroad" part is irrelevant.

    Could it be argued that the someone was paying the money for their own benefit ie the somebody helped with their care or even that their own mental health suffered by the somebody needing treatment? 

    I know that if one of my (adult & independent) children needed treatment, I would suffer mentally if they didn't get the treatment they needed. If they were providing support to me, then I would suffer even more. So the payment for the treatment would be for my benefit as well as theirs.
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  • Jeremy535897
    Jeremy535897 Forumite Posts: 10,243
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    Interesting idea, but it doesn't change the fact that you have made a transfer of value.
  • DBdoobydoo
    DBdoobydoo Forumite Posts: 112
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    How would HMRC ever know?
  • theoretica
    theoretica Forumite Posts: 12,067
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    How would HMRC ever know?

    Because they ask?  True, in many cases they might not know if the executor lies, but lying to gain an tax advantage is fraud.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • theoretica
    theoretica Forumite Posts: 12,067
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    It might be worth looking at the normal payments out of income exception if the person abroad was being frequently supported in other ways.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • Albermarle
    Albermarle Forumite Posts: 18,792
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    How would HMRC ever know?
    You can say the same about many things but they do investigate estates/executors at random, or if there is anything to indicate not everything is above board. 
    An executor is personally liable for any unpaid IHT. So I presume if the estate was settled, and then later HMRC came looking and discovered more tax should have been paid, then the executor may well have to pay it themselves. 
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