Are contributions to a funeral plan that increase by CPI/year taxable?

[tlf67482]

Considering a fixed price funeral plan and you can add arbitrary contributions to pay for flowers, wake etc that will increase by CPI from starting the plan until you die.

So the fixed price funeral plan could cost £2000 and you may add a £500 contribution to cover a wake.

If I understand the plan correctly this £500 would increase by CPI every year until your die.

1. Does this increase need to be declared on plan holders tax forms etc each year?
2. When the inevitable happens how is this £500+CPI treated? Is it free for the person organising the wake to do as they wish (obviously matching wishes)?
3. What happens if anything is left over?

Thanks