Inheritance Tax

palSSlap

My mum wants to pay for me to have knee replacement surgery privately. She is almost 90 so the 7 year rule will almost certainly not apply. I will obviously have paperwork that shows what the money was used for. My question is: does this still count as a gift or will it be considered an exemption for inheritance gift taxation?

Slinky

How much is the operation?

Keep_pedalling

Why are you worried about the 7 year rule? If your mother’s estate is below her IHT exemptions then it makes no difference, If her estate will be due to pay IHT then it will still pay the same amount of IHT unless she hasn’t used any of her annual allowance in which case the estate will pay a little less.

As the recipient of the gift you will not be liable for any IHT.

Brie

Slinky said:

How much is the operation?

The bill for mine was about £14k.  That was about 3 years back so might be approaching £20k now depending on the location.  It might lessen the sting a bit if the payment is made over 2 tax years - just guessing on this.....

The issue may be if mom is dependent on the local authority for any aspect of her care as they might question her paying out so much money (deprivation of assets).  Obviously if she has £200k in a bank account then they won't care as she would be using her own money for her care.  If it was borderline they might accept that you needed to op to enable you to do some caring for her.  (fyi - I had my knee op done while being one of my MiL's carers so would not have been able to care for her as well as I did if I hadn't had the op)

lisyloo

palSSlap said:

My mum wants to pay for me to have knee replacement surgery privately. She is almost 90 so the 7 year rule will almost certainly not apply. I will obviously have paperwork that shows what the money was used for. My question is: does this still count as a gift or will it be considered an exemption for inheritance gift taxation?

It's a gift, but she can gift £3K per year tax free.
She can gift you £3K for 2022/2023, £3K for 2023/2024.
The rest would be subject to IHT rules.