paying family to care

For information and discussion about benefits
With recent changes in pension laws you might be considered to be employing your sister and thus required to provide her with a pension. Don’t know if this applies in this situation. But anyone employing at least one other person has to provide them with a pension.
It;s certainly a generous payment you are thinking of making to your sister. Does she provide 24/7 care and do a lot of personal care? The going rate for say an hours care with an agency would be £23.00 perhaps £25.00 at the weekend. Have social services assessed mum's needs?I think this would be essential before you can justify paying that amount. If your mum needed 1 x hour visit plus 3 x half hour visits at say £15.00 then you would be looking at a weekly care bill of £430 so your figure of £450 would not be unreasonable. I think I am underpaying myself as usual!
I really do think if you haven't already done so a needs assessment is essential to provide evidence should it be needed and I would advise your sister to keep a daily record of work done for your mother. I don't think the inheritance tax gift of £3000 would be allowed in this instance when it is obvious that funds would be depleted in a couple of years or so and mum will need ongoing care . I think the £3K gift rule applies when the estate is likely to exceed the inheritance tax limit of £325K or £650 for a couple and can be used to bring the value of the estate down below the limit.
I don't think that's right, Henrietta - I think the annual gift of £3000 is always allowed and has nothing to do with the IHT limit.
See 'exempted gifts' here:
https://www.gov.uk/inheritance-tax/gifts
An interesting question, I can't decide and trying to put it in another context,
For someone who owned a house with assets over £23,250 and say for example £30,000 in savings. If they gave £6000 to a relative as a gift, would that not be considered deprivation of assets when they knew that their loved one required extensive care? You are allowed to gift £3K for the previous year once only I think.
I wouldn't like to give a legally certain answer. IHT and deprivation of assets are two separate subjects. Supposing someone suddenly decided to give £3000 twice, once for the preceding year, yet had never given £3000 in previous years, would the council treat it as deprivation of assets? I don't know. In the beginning of the thread, which I've just glanced at, it looked as if £3000 was given to two people in one year, so only one of those payments would be exempt from IHT. Or was one for the previous year? In your new example, if the person owns a house, I suppose that they will be liable to IHT so the £6000 payment is a good thing. So I'm really not sure.
In this specific example. the employment problem seems more serious to me, but the payments don't.
Not very helpful!
A legal minefield in deed. At least no one seems to think it is illegal so I guess the emphasis is on keeping evidence and being able to justify things.
Yes, it's two totally different organisations looking at the same thing from differnt view points. Inheritance tax wise and income tax wise a single £3000 gift a tax year is allowed BUT would SS look on this as deprivation of assets who knows?
For those of us with time, it seems best to start annually gifting £3000 (or up to £3000) now, then it would show as regular and not just done immediately before Care costs loom and therefore not deliberately depriving of assets

I really do hope we get someone in here soon who has been through this. It's ashame the original poster hasn't been back :?