THE INHERITANCE TAX THRESHOLD is to be frozen at £325,000 for individuals and £650,000 for couples until at least 2019 as the government seeks to reform what it describes as the “unfair” cost of social care for the elderly.
It is expected to include a £75,000 cap on the costs people pay for care and a rise in the threshold for means-tested support from £23,250 to £123,000.
Changes to National Insurance and pensions are likely to also contribute to the funding.
The cost of accommodation in residential care homes averages between £7,000 and £10,000 a year, something that the government said forces approximately 40,000 people to sell their homes every year – largely because they face unlimited care costs.
Health secretary Jeremy Hunt (pictured) described the current state of affairs as a “scandal”, describing his plans as a “fully-funded solution”.
He told the BBC’s Andrew Marr Show: “Just as people make provisions for their pensions in their 20s and 30s, so we also need to be a country that prepares for social care as well.
He added: “By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies, for people to have options on their pensions, so that anything you have to pay under the cap is covered.”
Chief executive of the Taxpayer’s Alliance Matthew Sinclair was critical of the proposals, describing them as “picking people’s pockets”.
He told the Telegraph: “Inheritance tax is a deeply unfair double tax which is levied on assets that will have been paid for by income the taxman has already dipped his fingers into.
“In opposition, the chancellor was critical of his predecessor’s love of stealth taxes, it seems like not much has changed in the Treasury since.”
Sinclair added that “punishing taxes” were not the answer to the social care problem, and called for spending cuts instead.
HMRC has outlined a change in VAT policy to the treatment of dwellings that have been formed from either the construction of new buildings, or from the conversion of non-residential buildings
Let us hope that valuable asset protection vehicles are not made prohibitively burdensome or abolished in the desire to “simplify” IHT
The government is pressing ahead with changes to the way it taxes individuals with a foreign domicile
I will feel slightly awkward when I write to the client who is about to receive a large invoice from the PAYE expert, offering him the fee protection going forward