Huffpost UK Politics uk

Inheritance Tax Plans To Pay For Social Care Cap 'As Credible As Findus Lasagne'

Posted: Updated:

Thousands more people are likely to be hit with inheritance tax to pay for an extension in state support for the elderly in a social care cap that been condemned as "about as credible as a Findus lasagne."

The coalition is expected to announce a three-year extension of the freeze in the inheritance tax threshold in a move that could affect 5,000 people.

Anybody bequeathing more than £325,000, or £650,000 for couples, has to pay 40% tax on anything over those levels, which have not been raised since April 2009 despite inflation.

jeremy hunt

Jeremy Hunt revealed the plans on Sunday

Extending the freeze to 2018, is intended to cover the £1 billion cost of introducing a cap on the total amount anybody has to pay on social care.

The expected £75,000 cap is more than twice as high as the £35,000 limit suggested by the independent Dilnot Commission appointed by Prime Minister David Cameron to make recommendations on the highly-fraught issue.

Alongside the cap, Health Secretary Jeremy Hunt is to announce a large rise in the assets threshold beneath which people receive means-tested support meeting care bills.

Currently £23,250, that is set to rise to £123,000.

Mr Hunt said: "The worst thing that can happen is at the most vulnerable moment in your life you lose the thing you worked hard for, that you saved for, your own house.

"And what we are trying to do is to be one of the first countries in the world which creates a system where people don't have to sell their own house."

Speaking on BBC1's Andrew Marr Show said the current situation was a "scandal".

Every year 30,000 to 40,000 people are having to sell their houses to pay for their care costs," he said.

"About 10% of us end up paying more than £100,000 in care costs."

LIKE HUFFPOST UK POLITICS ON FACEBOOK | FOLLOW US ON TWITTER

Mr Hunt said it would be a "fully funded solution", adding: "Finances are very, very much constrained at the moment and the fact that we are finding what might be as much as £1 billion a year to do this, shows that we want to help those hard-working people who have saved all their life and suddenly quite randomly find that their house is at risk."

findus horsemeat lasagne

The plans were slammed as being 'as credible as Findus lasagne' the brand at the centre of the horsemeat scandal

Labour peer Lord Warner, who sat on the Dilnot Commission, said: "Essentially, we thought that the fairest way of doing this, and it wasn't a precise science setting the cap, but we thought it was somewhere in that range, £35,000 to £50,000.

"At that level, give or take, you would actually mean on average no-one would have to dispose of more than about a third of the value of their housing assets."

The National Pensioners Convention (NPC) described the social care reforms as "about as credible as a Findus Lasagne".

NPC general secretary Dot Gibson said: "Using inheritance tax or money saved from the state pension system simply won't raise enough money to bring about the change that's needed.

"The social care system needs urgent and radical reform, but these proposals simply tinker at the edges.

"The current system is dogged by means-testing, a postcode lottery of charges, a rationing of services and poor standards and nothing in the plan looks like it will address any of these concerns.

"Setting a lifetime cap on care costs of £75,000 will help just 10% of those needing care, whilst the majority will be left to struggle on with a third rate service.

The Association of British Insurers (ABI) said the reforms were a potential "step forward".

Stephen Gay, the ABI's director of life, savings and protection, said: "This is potentially another positive step forward in tackling the challenges of an ageing society. The cap and the higher means test give people greater certainty and will enable them to plan ahead for later life."

Shadow care and older people's minister Liz Kendall said: "This would be a small step forward for some people who need residential care in five or more years time.

"But it won't be fair for people with modest homes. Andrew Dilnot recommended a cap on care costs of £35,000 and warned that anything above £50,000 won't provide adequate protection for people with low incomes and low wealth.

"And these proposals won't do anything for the hundreds of thousands of elderly and disabled people who are facing a desperate daily struggle to get the care and support they need right now.

"More than £1.3 billion has been cut from local council budgets for older people's social care since the coalition came to power. As a result, many vulnerable people can't get the support they need and are having to pay more for vital services."