Parent living with child

Bookworm105

kiss_my_face said:

GDB2222 said:

kiss_my_face said:

user1977 said:

Well, there's a council tax implication if it means the child no longer qualifies for the single person discount.

But otherwise I don't see any implications for other taxes. What are you thinking the inheritance tax effect may be?

Inheritance tax - if a payment of £200 a month is made over the period of 2 years and then the parent passes away, could that be seen as taxable for inheritance tax if no formal written agreement is in place. It may look like a series of 24 gifts totalling £4800 if there's no paper trail. 

You know that IHT is nil for the first £325,000?

Yes, but the parent may inherit money themselves in the next couple of years that increases their savings and pushes them over that threshold should they pass away. 
At moment this is all hypothetical, but really useful to get opinions to see what I've missed. 

the parent is making a contribution towards household expenses
There are no tax implications for that for either the parent or the child
Ownership is not a requirement when assessing if there is a single household. In this case blood really is thicker than water.
Lodger agreements and claim for rent a room allowance are utterly irrelevant.
The parent is "simply" paying a (nominal) share of the living costs. £200 per month towards food and utilities is hardly comparable with them directly paying money towards your own mortgage for example.

if you really want to give your parent some reassurance then instruct them to investigate the inheritance tax rules regarding payments from "excess income". If parent inherits a shed load of money which pushes their bank balance (i assume their estate is cash and (stock market) investments since they have no property?) over the IHT threshold then REGULAR payments from "excess" income is a specifically allowed deduction when working out the estate's total taxable value for IHT. 

badmemory

Personally I think that £200 may be a severe underpayment.  I assume she is in all day with the heating on & if she is anything like me her older joints are needing more heat.  Personally I would keep my head down & hope my sybling doesn't notice or my inheritance may be significantly smaller

Keep_pedalling

If the estate is substantial there is one potential IHT issue. As he sold his house over 10 years ago his estate cannot claim an exemption for the residential NRB under the downsizing rule so the maximum exemption if he is a widower will be £650k half that if he is not.