Can anybody answer this question on inheritance tax please?
My elderly father can no longer stay in his own home, and I have offered to care for him. However, because he is disabled, he needs to spend a significant amount of money converting my home to make it practical for him to live here. This will involve installation of a disabled en-suite, a walk in shower room, conversion of most of the exisiting rooms to give us all space, disabled grab rails etc. Although this work is likely to cost in the region of £50k, it will add very little overall value to the property. My question is, would the money being spent on this work be exempt from inheritance tax? I know that gifts over £3k have to be declared, but I would hardly call this a gift as we are not going to benefit from it. My arguement is that if he were able to stay in his own home by spending £50k on renovations, HM Revenue would only take the market value of the property into account, regardless of how much has been spent on it. It would seem spectacularly unfair to penalise families who take on this type of responsibility by categorising it as a gift for inheritance tax purposes, when actually it is nothing of the sort.