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Inheritance Tax frozen to fund care bills

John Fitzsimons
by Lovemoney Staff John Fitzsimons on 11 February 2013  |  Comments 12 comments

Inheritance Tax threshold frozen until 2019 to help fund Government's £75,000 cap on care home bills.

Inheritance Tax frozen to fund care bills

The Government is set to announce that the Inheritance Tax threshold will be frozen until 2019 to fund a cap on care home bills.

The Government wants to install a cap of £75,000 on the costs elderly people have to pay for care. After that point is reached, the State will cover the rest of the bill.

Inheritance Tax is currently payable on estates worth at least £325,000. While this once applied to only the wealthiest, house price inflation has meant that increasing numbers of people have been hit with the 40% tax levy on every penny above that threshold.

The Conservatives had previously pledged to raise that threshold to £1 million, and this measure has already led to grumbling from backbench MPs.

Government sources have suggested that as many as 100,000 people who would have had to pay for their care will be helped. There has been growing unrest at the number of older people forced to sell their home just to cover the costs of social care – as many as 40,000 a year according to figures from the Government.

That said, it’s worth noting that the £75,000 cap is double the figure recommended by the Dilnot report into social care.

Critics have suggested that the figure is too high to get people engaged with the idea of saving to cover any future care costs, though the Government hopes that insurance companies will step in and start offering policies which will reduce the impact further.

What do you think? Is the Government right to freeze Inheritance Tax to pay for a social care bill cap? Has it set the cap too high? Have you set money aside in case you need to pay for care? Let us know your thoughts in the Comments box below.

More on social care and Inheritance Tax

How to prepare for your care in retirement

Eight ways to pay for social care

Social care: thousands of pensioners lose home due to poor procedures

Ministers: elderly should downsize and save for care

How to cut your Inheritance Tax bill

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Comments (12)

  • amwell44
    Love rating 77
    amwell44 said

    Electricblue, if what you say about China and Chinese goods is true, how come they have a growth rate of about 7%, whilst we are struggling to achieve 0.5%?

    I'm old enough to remember when Japanese goods were considered trashy and their cars were a joke. Look at them now.

    Back on topic, it's the Libdems in the Coalition who won't allow the IHT threshhold to be raised. Vote in a Conservative government and you will see it happen. Neither of the other Parties will do it, especially Labour, who are passionately for high taxation and against inherited wealth.

    Report on 15 February 2013  |  Love thisLove  0 loves
  • laplennerie
    Love rating 20
    laplennerie said

    Get rid of your wealth before you die. It has always been the case of savers in the UK - if you save you get punished. The money rasied from this will dissapear into that great black hole managed by Westminster Gas works.

    Report on 17 February 2013  |  Love thisLove  0 loves

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