Hi Em,
There are two different issues, here. One is the issue regarding Inheritance Tax, and the other is ownership of the house.
The house is in your names, but you partially purchased it with a 'gift' from your Nan. These 'gifts' are regarded as PETs (Potentially Exempt Transfers) for the purpose of IHT. After 7 years, you won't have to pay any tax on this gift, and it won't be regarded as part of her estate. After 3 years, there's a sliding scale of taxation - ie it will still have to be included in her estate should she die, but there will be less tax to pay the longer she lives.
IHT is only counted when the value of the gift exceeeds the IHT-free allowance, which is around £263,000.
If the value of your Nan's 'gift' is less than that amount, there's not a lot to worry about.
Sometimes there is a suspicion by the state that 'gifts' are made in order to avoid capital being counted towards the cost of Residential Care, but in your case, that wouldn't be so, I shouldn't think, as you are all acting as your Nan's carers, and could easily prove that. For as long as she's lived with you, you and the family have saved the state a lot of money, by looking after her, and you could show that your Nan made this choice as she knew that she needed care, and believed this to be the most sensible way to provide herself with that care.
Also, the state allows provision to be made against the estate of someone who may have caring needs, towards tax planning ie avoiding IHT (which is perfectly legal).
I don't know whether any of this helps, and whether or not it's relevant to your case.
Why don't you get some advice at the CAB? I don't know whether the 7-year sliding-scale IHT rule also applies to charges which could be levelled against the 'gift' for the purposes of clawing back cash for residential care, so you need to get that clarified.