Tax relief entitlement for private homecare

Can I claim relief on private homecare paid by my mother?

Scenario:  My mum has dementia but luckily is still living at home. She has a combination of home help hours funded through the HSE, time spent with her by myself and my siblings and about 10 hours of privately funded home help as part of her care plan (this amounts to about €900 a month).

The privately funded care has been paid by her up to now. The payment is transferred from her account (my sister is a co-signatory of her account) to mine and I write a cheque to pay. Could I claim tax relief on the cost of the privately funded home help and use any savings to pay for more care?

Should I be declaring this as additional income and paying tax on it? My mum is on the State pension and doesn’t pay tax as her annual income falls below the tax threshold.

Her funds are starting to run low now so my siblings and I intend to contribute to the cost from our own funds. Are we entitled to any tax relief against the contribution we make?

There is provision for tax relief on the costs of homecare but the key thing is who is paying it. If you are paying the €900 a month, then you are eligible to claim the relief. And it’s worth it, as relief on private home care is one of the few still allowable at your higher rate of income tax.

Of course, if your mother is paying the bill, then it is she who can claim the relief and, as you point out, that is of no real benefit as she has no tax to claim relief against. It makes much more sense for you, or your brother, to pay those bills as you have tax against which you can claim the relief.

Working the sort of transfer you now operate makes little sense. You are paying the bill but with your mother’s money, so it is effectively she who is paying the bill and unable to claim relief.

Treating the money as a transfer to you makes sense only if there is no danger of you exceeding the lifetime limit on gifts and inheritances from a parent (currently €280,000 either now or following the eventual passing of your mother). The €900 a month will be seen as gift from her to you. That’s €10,800 a year and, while there is a small gift exemption of €3,000 per annum, the balance of €7,800 will be set against your lifetime limit. If that limit is exceeded, you will be liable to capital acquisitions tax on the money.

In the end, it appears that your family is going to be moving to making the contributions from their own resources anyway. If, as you suggest, a number of you will be contributing to the cost of your mother’s private health care, then each can claim on the amount they contribute. Clearly, if they themselves pay no tax, they can have no relief and if they pay tax only at the basic level, they will be able to claim relief at the basic 20 per cent rate

The maximum you can claim in relief in any year is €75,000 (€50,000 for years up to and including 2014) but that is well beyond the figure you are currently considering, even before the bill is split among several of you.

How is the tax relief granted?

If you are a PAYE customer, relief can be claimed during the tax year and your Tax Credit Certificate will be increased by the amount of relief due.

Alternatively, you can claim relief at the end of the tax year by submitting your form P60 and that of your spouse or civil partner, if applicable, to your Revenue Office.

If you are a Self-Assessment customer, the claim should be made in your annual tax return and relief granted will be shown on your Notice of Assessment.

Unused tax relief in a particular year is not carried forward to the next year.

Time Limit for Repayment Claims

A claim for repayment of tax must be made within four years after the end of the tax year to which the claim relates.

Further information is available from Revenue.ie or you can contact your Revenue LoCall Service 1890 444 425.

If you have queries on Inheritance Tax please contact George Skelton at 0539170507 or email George at gskelton@rda.ie