My mother will be moving in with me as her health is declining and she no longer wishes to live alone. However, my home is not suitable in its current condition and will require some building works to accommodate her. The idea is to pay for the renovations using some of the proceeds from the sale of her property. My question is: if she were to die within seven years of paying for the renovations would I have to pay inheritance tax on the money she used to pay for the building work?

Presumably, after the renovations are completed you will still own the whole house, as you did before the renovations. If so, your mother has effectively gifted you the price of the renovations; this is a PET (i.e. a potentially exempt transfer), and if she dies within seven years the amount she spent will be added to the assets she leaves on death, to calculate her taxable estate for inheritance tax purposes.