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