Bills contribution with parents in annex

[WonderWoody]

Hi,

The outlaws are coming to live with us. It is a house with a detached annex - all within the curtilage of the main house.
We will not be charging rent but to make it easier all the bills will remain in my name and they will pay a contribution to costs such as Water, Electric, Gas, Septic Tank, Broadband, etc.

Because they will be paying me a monthly amount, I don't want this to be considered as a Gift for the likes of Inheritance Tax or if they have to go into long term care.

We were going to draw up a contract that identified the fixed monthly cost and what it was for, but is this the best way? Would it stand up in court should the worst happen?

Advice please.

John.

[Samson22]

Hi, Not totally okay with the care issue but re inheritance tax issues every year someone can gift up to 3000 and is not counted even if passed away so in this case would mean 6000 which I hazard a guess would cover it all . Unless they are gifting monies to others. After 7 years they would be ignored for iht purposes

[maths]

It's probably preferable not to treat the parents as paying rent but simply making gifts.

As commented above, each parent could gift up to £3,000 per annum (ie £6,000 in total).

Depending doing upon the size of the parents' estates there may not be any IHT issues for them.

[AGoodman]

I don't think a contribution to household bills should be considered rent or a gift.

I'd go so far as to say there is no need to have any kind of agreement, just keep a note of how you calculated the number in case it is ever questioned. I would be amazed if it were ever questioned.