Ok... second try....
There are a couple of things here. First is the issue of allowable cash gifts within a year, second, the assumption of the careworker that the cleaner and gardener are paid by gift and third, the rules and legislation surrounding carehome fees.
So - cash gifts. There is a legal limit on how much one person can give to any other single entity within a year without incurring a defered tax liability. At the moment that limit is around £6k - the liability is deferred, meaning that it is NOT instantly payable - if I remember correctly the deferment is upto 7 years, meaning that if the giver survives for more than 7 years after the gift was given the liability is cancelled and the gift is 'free', die sooner than that and there will be a tax bill based on the original gift and reduced by the number of years survived. Rather obviously the tax bill comes from the estate of the deceased and/or the next of kin. Something my Mum was really annoyed about when we discovered that Dad had exceeded the cash gift limit 5 years ago, while we were winding up his estate!
As for the cleaner and gardener - I think the solution is for them to write and confirm a spoken agreement thus proving the payments were for services not as gifts - that should leave all tax liability with them (and I hope for their sakes they delared their earnings correctly!)
Carehomes. Yes.... I'll try and be brief. Care homes can reclaim some of their costs against the income and savings of the care recipient. Legally the recipient can keep upto £14k in savings but some care givers are sharks and take the money - once they have it good luck getting it back! Unless the care recipient was very careful several years ago in tying up all property and investments all of the recipients estate can be used, they can be forced to sell property and liquidate assets to provide funding and gifting at this point is not allowed as it is seen to be a measure to dodge payment. I recommend you go to the .gov site and read up on the carehome pages - and help your Mum's friend to have two accounts - one for the legal amount of savings and one into which all her pensions and any investment money is paid, only allow the care home access to the income account and make manual transfers to that if needed. That should limit the damage in so far as it is possible.
Good luck with the research you may want to do.
Terry
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