Am I allowed to have this money in my bank account? Advice please

[athomewithcats2]

I help an elderly relative with some money matters, like ordering online shopping, stuff from Amazon etc.

She transferred £5500 in advance for me fo buy these things for her. I didn’t want this money in my current account as it needs to be separate to keep track, so I transferred it into an online savings account and transferred the funds into to my current account when buying something for her.

I now have Power of Attorney (along with 2 other people) but I don’t have access to her bank accounts yet. So the money to pay for things for her is still the savings account in my name.

I am worried about doing something wrong without meaning to. Is it ok for this money to be in my bank account, if I am using it for this purpose?

Also if there is interest, how does that work? Would the interest be mine (as it’s in my bank account and coming out of my personal savings allowance)?

Just get yourself to her bank this week & add yourself as POA on her accounts and then transfer the cash back to her.

i have a card on my Mums current account (Nat West) and building Society (Yorkshire). Nat West there are no restrictions on what you can spend, YBS can only transfer £ to her account or pay e.g. bills for her nothing else but that’s enough.

I was in Nat west for a while filling in forms but it was done in an afternoon & card came shortly after that.

it didn’t include her credit card for reasons I cannot fathom/they cannot explain but we can live with that as dm lives close by so I check her statements there.

I think you should ignore the suggestion of a joint account that seems to be a very odd and complicated way of doing something when poa provides an actual solution.

I’m sure I read on here that Nationwide were very good with POA accounts but some banks are not so good.

You need to clarify what is happening ( put it in writing for the other attorneys) and pay the interest to your relative minus any tax you have paid.

Does your relative claim any sort of benefits? If so is this money in your account so her savings look to be below the benefits limits?
If you don’t know her finances I’d be extremely careful of putting her money into your account!
She could get prosecuted for benefit fraud….not sure what charges you might face for aiding this.

No, she’s not entitled to any means tested benefits so nothing like that

But what if we would pay different tax rates? I am not looking for the moral answer or what people think is the right thing to do, but the legal answer. Someone IRL said said it’s like a loan, they have loaned me the money and I’m paying it back by buying things. In that case, the interest on how I invest it would be mine like if I had any loan, but if I’m paying HER interest on the loan she would need to declare THAT as taxable. So in other words, if I pass the interest on to her it would need to be declared formally.

It’s not a loan as such like that, but it’s a similar scenario.

I know it’s a small amount but I’m worried about doing something wrong and very particularly about following the rules. People may think the right thing to do is to pass on the interest but I’m pretty sure that’s against the rules with personal savings allowances unless it’s declared when passed on.

You can get carer accounts where the account is in her name but you have a card to pay for things.

She might also be able to take out a credit card with you as the second card holder (some lenders require you to live at the same address but not all so need to check).

Don't open a joint account it could destroy the others credit rating if one of you has bad debt or doesn't manage their finances well.

@athomewithcats2 WRT tax I am afraid you are going to have to suck it up and accept that the money is in an account in your name so the interest is paid to you and you are liable to pay tax at your marginal tax rate.

You can’t undo what has been done.

What you can do is pay the tax from that account. You need to keep meticulously records and copies of all receipts etc. you need to show the interest and how the tax was calculated.

ASAP get the LPA registered with the bank and transfer the money back.

You can be an agent on her account - this allows you to pay out, pay in, and any interest remains hers.

You shouldn’t be holding her money in a bank account in your name. Me and another person have POA for an elderly relative. His account is with the Nationwide and the other POA has a debit card in her name to use on his account to buy him toiletries etc (he is in a care home) and other stuff he needs or asks for. She keeps the receipts for everything she buys for him. There are simple solutions which don’t lead to complexities around tax and possibly estate matters in the future

What you’re doing isn’t automatically wrong, but it does sit in a slightly risky grey area if it isn’t clearly separated and documented.
That £5,500 isn’t your money — it’s your relative’s funds being held by you as an informal agent. Even if the intention is correct, the issue is that in law it should be clearly identifiable as client/third-party money, not mixed into personal savings or personal current accounts.
Now that you’ve got Power of Attorney, the clean way forward is to treat it as her money formally:
keep it separate from your personal accounts, and ideally move it into an account that’s used only for her finances once the POA access is active. Mixing it with personal savings accounts is what can create problems later, especially if anyone ever asks for a clear audit trail.
On interest — technically, any interest generated from money that isn’t yours is still her money, not yours. In practice, though, if it’s a small amount and the funds are being used for her benefit, it’s usually just recorded and not treated as personal income. The key issue is transparency, not extracting benefit.
The safest position here is simple: make sure every pound can be tracked as her money, and keep a clear record of what goes in and out.
If you want proper confirmation based on POA rules and how to structure this correctly going forward, you can get legal guidance here: https://consultantlm.uk/partner/yurydychniposluhy

If you have to pay tax on the interest just pay it from the interest on her money.

ChatGPT has generated a load of rubbish as per usual. It doesn’t need to be held as client funds because the relative isn’t a client!!!

OP, it’s actually really easy to contact HMRC and explain

She gave you the money to pay you back for things you've already bought? Then it's your money.
If it's to do with UC then it could bring you over the threshold depending on what else you've got money wise.