TaxPersonal TaxGovernment to freeze IHT threshold to pay for care

Government to freeze IHT threshold to pay for care

The health secretary is to hold the inheritance tax threshold for several years, in order to pay for improved social care for the elderly

Government to freeze IHT threshold to pay for care

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.

Related Articles

HMRC collects record £5bn in inheritance tax

HMRC HMRC collects record £5bn in inheritance tax

4m Emma Smith, Managing Editor
Inheritance tax relief predicted to hit £900m through charitable donations

Legal Inheritance tax relief predicted to hit £900m through charitable donations

5m Emma Smith, Managing Editor
The rising significance of inheritances

Personal Tax The rising significance of inheritances

8m Emma Smith, Managing Editor
UK has ‘vital role to play’ in beating tax evasion, declares Panama Papers whistleblower

Corporate Tax UK has ‘vital role to play’ in beating tax evasion, declares Panama Papers whistleblower

1y Fraser Simpson, Reporter
Accountants worry that advice they give goes beyond skillset

Personal Tax Accountants worry that advice they give goes beyond skillset

2y Fraser Simpson, Reporter
Duke of Westminster and IHT – a tragedy from all perspectives

Personal Tax Duke of Westminster and IHT – a tragedy from all perspectives

1y Accountancy Age, Reporters
HMRC inheritance tax take hits £4.7bn all-time high

Personal Tax HMRC inheritance tax take hits £4.7bn all-time high

1y Richard Crump, Writer
Government should rethink “digitally distracted” HMRC, ATT urges

Administration Government should rethink “digitally distracted” HMRC, ATT urges

1y Fraser Simpson, Reporter