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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My mother is in care and I sold her house to pay for it. I

Resolved Question:

My mother is in care and I sold her house to pay for it. I have power of attorney and for ease I have invested the money in my name (around £300,000) but recently have received a tax form. I don't know whether to declare the interest that the investment has made against my income (this will probably bring me just short of the higher tax rate) or whether to ignore this for tax purposes as when she dies I will declare it against potential inheritance tax.
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

What do you mean by "when she dies I will declare it against potential inheritance tax"?
Customer: replied 3 years ago.

I can either pretend it is already my money and declare the interest or ignore the interest it is making at the moment because it is her money and so it shouldn't be impacting on my income. She is 94 coming on 95. Do the tax revenue consider it that it is 'my money' or as someone who is a trustee do they accept that it is her money and therefore I don't have to declare it yet.

Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 3 years ago.
Hi again.

You have power of attorney over your mother's finances so that means you can make decisions and sign documents on her behalf but her assets are hers until she passes away.

The account should be in "Your name for Your Mother". The interest is hers for tax purposes, not yours, so any declaration of the interest in your own tax return would be false. If your mother is a basic rate taxpayer and the interest is having 20% tax deducted at source, she will have no further tax to pay. If she is a non-taxpayer, she will be entitled to repayment of some or all of the tax being deducted at source and you might consider lodging a form R85 with the bank or building society to have the interest paid gross and making a claim for repayment of tax deducted on a form R40. If she is a 40% taxpayer, she will have further tax to pay on the interest.

I hope this helps but let me know if you have any further questions.
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