Elderly parent shopping - Tax liability?

[Bert Cheese]

Forgive me if this an obvious one...seems to a grey area to me though.

For a number of years now I have done the bulk of my parents weekly shopping (both long retired and neither drive now) which I paid for along with mine on my credit card, they then repaid their part of the bill in cash which I used for general weekend spends and consequently haven't withdrawn any cash from a bank etc for the last ten years or so.

Recently with cash becoming frowned upon they have been writing me monthly cheques which I pay into my bank via the phone app, we are talking around £600 per month (don't ask!) and its obviously being paid from them to me now rather than untraceable cash.

My question is do I need to keep the shopping receipts for future reference as otherwise these cheques could simply be seen as them gifting me money which will fairly quickly exceed the £3k limit when I am simply trying to do the right thing for all concerned.

I seem to have more paperwork filed at home than at work for mortgages and various policies etc as it is...do I need yet another box file or am I needlessly worrying here?

[Simpo Two]

It might be wise.

Perhaps they could entrust you with a debit card - so the payment comes straight from their bank - is that legal?

[VR99]

Simpo Two said:

It might be wise.

Perhaps they could entrust you with a debit card - so the payment comes straight from their bank - is that legal?

If the OP has either POA or is a deputy (via Court of Protection) for the parent(s) then maybe possible but there will be others more knowledgeable on this as I am not 100% sure.

[Eric Mc]

Gifts out of your annual income are exempted from Inheritance Tax. This is an extra relief over and above the £3,000 limit.

So, unless you are using your savings or cashing in some investments to fund your parents' shopping bills, you have nothing to worry about and you have no requirement to keep records for IHT purposes.

Relevant Rule -

Section 21 of the Inheritance Tax Act 1984 deals with the normal expenditure out of income exemption. It is an extremely important exemption for IHT planners.

If a gift (or, more precisely, a ‘disposition’) is exempt, then for IHT purposes it is irrelevant whether or not the donor survives for seven years.

For the exemption to apply, it must be shown that a transfer of value meets three conditions:

1. It formed part of the transferor’s normal expenditure

2. It was made out of income (taking one year with another), and

3. It left the transferor with enough income to maintain his/her normal standard of living.

[clockworks]

Mum has POA for my aunt. When we went to the bank to register the POA, mum was offered a debit card on aunt's account. She uses it to pay for aunt's toiletries, treats, etc.

Keeps it simple.

[Bert Cheese]

Thanks to all for your input, much appreciated and has given me some ideas for thought at least.

[VR99]

OP just as an fyi, I am a deputy for one of my parents and I keep all expenses receipts mainly as records for the CoP annual reports but also just in case if any tax or IHT queries come up further down the line.

[Simpo Two]

VR99 said:

Simpo Two said:

It might be wise.

Perhaps they could entrust you with a debit card - so the payment comes straight from their bank - is that legal?

If the OP has either POA or is a deputy (via Court of Protection) for the parent(s) then maybe possible but there will be others more knowledgeable on this as I am not 100% sure.

In that case yes, no problem, it's what it's for. In this case they're not at that stage so I was proposing they simply let him use one of their cards on trust.

[anonymous-user]

One way to deal with this is to do their shopping on your credit card and get them to pay an appropriate amount off your credit card at the end of the month so their stuff never touches your actual bank account at all.

Another is for you to get a separate credit card in your own name which you use for their stuff and nothing else - again enabling them to pay it off once a month. Nice easy records for your file as well.

IMO you won't need to worry too much about HMRC and detailed records because THEIR bank statement will show they apparently have no other outgoings apart from the usual Direct Debits (council tax, utilities etc) and one monthly payment of reasonable living expenses.

[Bert Cheese]

Thanks again, the last point by rockin makes a lot of sense as well regarding my parents outgoings as the amount should remain fairly consistent each month and they have no other real extravagances of note.

Seperate cards etc would be a faff as I do a combined shop once a week in Sainsburys on the way home from work using their Scan & Go system so its all on one receipt...carrying 2 scanners about may not work and the thought of having to load/unload the lot onto a manned tills conveyer belt isn't something I want to contemplate in the current situation.