Inheritance tax

emilyboxer

Hi, my mum is thankfully still with us and wishes to continue gifting her 4 adult children approx £9,000 a year.
She lives comfortably in a residential home and receives her pension, with private pensions.
These do not add up to more than £12,000 a year.
She has no savings but does have a funeral saving account.
I am a tad confused re inheritance tax: as her estate is under £325,000 does this mean the 7 year gifting rule doesn't apply.
Or, is it wise to now term the gifts as income supportive?

Many thanks for your advice.....

p00hsticks

I'm not sure what you mean by a 'residential home' ? Is it a private home she owns or is it a care home / nursing home ? /how is it being paid for ?

emilyboxer

Her care home is fully funded by the local council 

emilyboxer

p00hsticks said:

I'm not sure what you mean by a 'residential home' ? Is it a private home she owns or is it a care home / nursing home ? /how is it being paid for ?

She lives in a care home funded by her local council.

pollypenny

I don't understand how the council is funding her place if she can give away £9000 a year. 

emilyboxer

She has her pension, and NHS pension she did not own any property.

Spendless

pollypenny said:

I don't understand how the council is funding her place if she can give away £9000 a year. 

Me neither. In England its anything from ( I think) £23250 you contribute on a sliding scale. Once you drop below £14250 the council fund the place, but your pensions are taken from you to pay towards these costs and you are left with pocket money of (I think)  £30ish per week.

If the OP Mum has dropped down to having £14250 its only going to fund 1 year max of giving away £9k to her adult kids.

Im addition I didnt think you could just 'ringfence' money in a savings account for future funeral costs. This was the reason my Mum purchased a funeral plan for my Nan when she went into a care home as that doesn't count as DOA.

OP - Are you sure youve got this all correct? It might also be helpful to say where Mum lives in UK in case theres diff rules to England. 

emilyboxer

pollypenny said:

I don't understand how the council is funding her place if she can give away £9000 a year. 

She receives social care funding as she has no property, or savings..
Just her personal and private NHS pension.

emilyboxer

• Mum has a funeral savings plan, Sunlife, not a savings account.
  
  She was assessed for CHC, and this was awarded two years ago.
  
  NHS Continuing Healthcare (CHC):

  If a parent is assessed as having a primary health need and receives NHS CHC funding, this funding covers the full cost of their care, whether at home or in a care home. CHC funding is not means-tested, meaning it doesn't affect their State Pension. 

poseidon1

OP does your mother live in Scotland where there is a far more generous provision for personal and nursing care ( paid by the Scottish Government), compared to England which most forumites are familiar with?

They have difficulty understanding how it is possible for your mum to be eligible for free social care but have £9000 per year she can gift from her small pension given she has no savings as such, unless of course she is some how able to accumulate the bulk of her pension ( unspent) annually.

As for IHT, from what you say she has no estate ( her pensions will die with her) so no IHT concerns at all.

emilyboxer

I was advised by the council that mum qualified for CHC funding due to her health and financial position.

She was receiving housing benefit prior to her admission to, and subsequent, transfer from a hospital - where she had received a mental health, and auzheimer diagnosis.
She transfered to a nursing home, and since then has continued receiving her pensions.

I queried her receipt of attendance allowance when I obtained power of attorney, which ceased. I have been waiting for three months +  for any outcome/repayment process.

She lives in England, where CHC is awarded, and I have requested copies of the CHC funding agreement which will hopefully shed more light on the situation.