Thousands more people will have to pay Inheritance tax
Social care: Inheritance tax freeze expected
Under the proposals, the state would cover the cost of care above £75,000Thousands more people will have to pay inheritance tax to help fund long-awaited social care reforms in England, ministers will announce on Monday.
The inheritance tax threshold is to be frozen at £325,000 for individuals and £650,000 for couples for three years from 2015.
That will help to fund plans including an expected cap of £75,000 on the costs people in England have to pay for care.
Campaigners say higher taxes have been introduced “by the back door”.
The move comes despite Chancellor George Osborne’s Autumn Statement pledge, in December, to raise the threshold by 1% – to £329,000 for individuals and £658,000 for couples – in 2015/2016.
Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said the “sleight of hand” from the chancellor was “unfairly punishing families who simply want to leave something to their relatives when they pass on”.
“The government has to address the strains that future social care will put on the public finances, but the answer is not to go back on its word and introduce higher taxes by the back door,” he said.
‘Not credible’
The government is expected to announce on Monday that, from 2017, the costs of personal care for the elderly in England would be limited to £75,000 – although the cap would not apply to the cost of accommodation in residential care homes.
It would also let people in England with assets of up to £123,000 qualify for some state help – the current limit is £23,250.
“Start Quote
It’s not helping anyone to announce a generous cap by increasing the national debt. We need to have some realism, the important thing is that we have a cap”
Health Secretary Jeremy Hunt
It says its plans could help up to 100,000 people who struggle to meet the costs of social care.
Ministers estimate the policy could cost an extra £1bn a year by the end of the decade.
Health Secretary Jeremy Hunt is expected to set out full details of the government’s plan in a statement to the Commons on Monday,
He will say it will be partly funded by the inheritance tax freeze as well as previously-announced changes to National Insurance and pensions and further cuts in government departments.
Reform of social care has been the objective of successive governments and in 2010 economist Andrew Dilnot was commissioned by the coalition government to examine options for overhauling the system.
The Dilnot Commission recommended setting a lifetime cap of £35,000 on the total people would have to pay towards care at local authority prices – excluding living costs – and raising the value of assets people could hold before having to pay the full cost of their care from £23,250 to £100,000.
Mr Hunt is quoted in Saturday’s Daily Telegraph as saying the £35,000 cap would “not be credible” in the current economic climate.
Labour says one of the reasons costs are rising is because the government is already cutting local authority care budgets too severely.
Costs rising
The Local Government Association called for a system that helped families with care costs as well as encouraging people to plan ahead “both financially and through healthy living to help prevent the need for care”.
“We are concerned that cap alone won’t address these issues,” it said.
The Alzheimer’s Society said that a large rise in the capital threshold could take thousands of people “out of the firing line” for huge costs but added that a £75,000 cap was “so high that it would only help ‘the few'”.
In Scotland personal care is free for those over the age of 65 who have been assessed by the local authority as needing it.
People who live at home are not charged for personal care services, while those paying their own way in care homes get more than £200 a week to cover personal and nursing care.
While Holyrood says it is fully committed to the funding of free personal care, figures published last year showed the cost of providing it had risen by more than 150% since 2005.
In Wales, a weekly maximum of £50 is charged to all those using non-residential social services;.
The Welsh government has pledged to build a new system of paying for social care that is “fair, affordable and sustainable in the long term”.
