Tax efficiency when paying for father's care

[ClubMan]

The one here: https://www.askaboutmoney.com/threads/using-gift-money-to-employ-carer-for-dad.228130/

i.e. Using gift money to employ carer for Dad

That was my idea above but, on reflection and having seen @T McGibney's comment to the same suggestion in the other thread, I can see that this would quite possibly fall foul of anti-avoidance rules so not be tax compliant. I.e. it's a set of transactions designed purely or mainly to avoid tax.

 

[Dr Strangelove]

• I have 2 siblings - both live outside of Ireland so are not paying tax here
• I am PAYE employee on higher rate of tax
• My Dad's assets are approximately as follows:
• House Value of 600,000
• Cash/Savings of 350,000
• His income is about 19,000 per year
• My Dad's will will distribute the estate equally between the 3 of us

The OP will not pay CAT on any inheritance nor will siblings. There is no CAT benefit to the father gifting the costs of his own care apart from cash flow.

Options:

1) If the OP has the funds she can pay for her father’s care out of pocket and claim tax relief

2) Siblings could potentially loan the OP funds to pay for their share of father’s care and OP could claim tax relief on this too. Loan could be settled when estate is distributed.

1) is certainly tax compliant but I am not sure about 2).

PS: @Mammysboy you are looking to become an employer here too and will have payroll obligations.

 

[Brendan Burgess]

Your father cannot give you money for you to pay for his care. Well he can, but you cannot claim tax relief on it.

If you pay for your father's care without being reimbursed, then you will get tax relief.

If you pay for your father's care instead of him, his estate will have more in it when he dies.

And so you and your siblings will benefit.

Any arrangement to settle this between yourselves so that you would get tax relief while not really paying for his care would be tax evasion.