Social care: Inheritance tax freeze expected


Health Secretary Jeremy Hunt says people must feel confident their homes are not at risk

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Thousands more people will have to pay inheritance tax to help fund long-awaited social care reforms in England, ministers will announce on Monday.

The inheritance tax threshold is to be frozen at £325,000 for individuals and £650,000 for couples for three years from 2015.

That will help to fund plans including an expected cap of £75,000 on the costs people in England have to pay for care.

Labour said that would be "a small step forward for some people".

The move on inheritance tax comes despite Chancellor George Osborne's Autumn Statement pledge, in December, to raise the threshold by 1% - to £329,000 for individuals and £658,000 for couples - in 2015/2016.

Start Quote

Just as people make provisions for their pensions in their 20s and 30s, so we also need to be a country that prepares for it social care as well”

End Quote Health Secretary Jeremy Hunt

The government is expected to announce on Monday that, from 2017, the costs of personal care for the elderly in England will be limited to £75,000.

That cap would not apply to the cost of accommodation in residential care homes which averages at about £7,000-£10,000 a year.

The plan would also let people in England with assets of up to £123,000 qualify for some state help - the current limit is £23,250.

It says its proposals could help up to 100,000 people who struggle to meet the costs of social care.

'Scandal' of care costs

Health Minister Jeremy Hunt told the BBC's Andrew Marr Show he would set out the details of the "fully-funded solution" in the Commons on Monday.

"The real point here is that we have a scandal at the moment where, every year, 30 to 40,000 people are having to sell their houses to pay for care costs," he said.

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

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."

Start Quote

We will make sure no-one is forced to sell their home to pay for care in their lifetime”

End Quote Deputy Prime Minister Nick Clegg

He said that, "just as people make provisions for their pensions in their 20s and 30s, so we also need to be a country that prepares for it social care as well".

Mr Hunt said he would not comment on an inheritance tax freeze ahead of his Commons statement, but said: "The point of what we're doing is to protect people's inheritance - the worst thing that can happen is, at the most vulnerable point in your life, you lose the thing that you've worked hard for, that you've saved for - your own house."

Writing in the Sunday Telegraph, Deputy Prime Minister Nick Clegg said: "We will make sure no-one is forced to sell their home to pay for care in their lifetime, and no-one sees their life savings disappear just because they developed the wrong kind of illness."

Asked if it was "a firm absolute" that no-one would have to sell their house to fund their care, Mr Hunt said that was "the objective".

On Monday, Mr Hunt - who estimated the policy could cost an extra £1bn a year by the end of the decade - is expected to say it will be part-funded by previously-announced changes to National Insurance and pensions.


Paying for personal care is a problem facing millions of voters.

Grappling with a package of measures to help alleviate some of the pain has proved equally testing for ministers.

Jeremy Hunt says the coalition has costed a viable scheme which will provide more help for the less well off.

That is an element Liberal Democrats argue they have helped to secure.

But pledging to fund a £1bn bill - at a time when finances are stretched - could prove costly.

Six years ago, George Osborne promised to raise inheritance tax thresholds to £1m, a move credited with a revival in Tory fortunes.

He will be hoping his decision to freeze them now will not have the opposite effect.

'Not adequate'

Reform of social care has been the objective of successive governments and in 2010 economist Andrew Dilnot was commissioned by the coalition government to examine options for overhauling the system.

The Dilnot Commission recommended setting a lifetime cap of £35,000 on the total people would have to pay towards care at local authority prices - excluding living costs - and raising the value of assets people could hold before having to pay the full cost of their care from £23,250 to £100,000.

Labour said that, while the government's plan would help "some people who need residential care in five or more years' time", it would not 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," shadow minister for care and older people Liz Kendall said.

"We need a far bigger and bolder response to meet the needs of our ageing population: a genuinely integrated NHS and social care system which helps older people stay healthy and living independently in their own homes for as long as possible."

Older people's charity Age UK said it was disappointed at the "high cap" of £75,000 but added "a high cap is better than no cap at all".

Caroline Abrahams, a director at the charity, told BBC News: "Very many older people are absolutely terrified about... the catastrophic cost that care can sometimes do to you.

"The reality is people are still going to be paying quite a lot towards the cost of their care," she added.

Economist Ros Altmann said the proposals would create a fairer system that would allow people to "plan and prepare for care".

'Insurance solution'

But she added: "Even with the new system, you will have to save some money for care... at the moment there aren't any savings plans that will help you.

"[The reforms] will start to open up the possibility of the financial services sector being able to help people prepare for care.

"I don't think an insurance solution will happen very easily with this high level of cap... but I would hope that we would start to see savings products - and perhaps group insurance products, where people join together to save or insure against one or two of them needing care."

The reforms have been welcomed by the Association of British Insurers (ABI) as "another positive step forward in tackling the challenges of an ageing society".

The ABI's Stephen Gay said it was "vital that people clearly understand the cap and what costs are covered, and a national awareness campaign will be needed to make this happen".

In Scotland, personal care is free for those over the age of 65 who have been assessed by the local authority as needing it. In Wales, a weekly maximum of £50 is charged to all those using non-residential social services. Northern Ireland has a means-testing system similar to that in England.


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  • rate this

    Comment number 241.

    Hunt paid himself £2m to supplement his meagre Ministerial salary and yet still felt the need to "take advantage" of a tax payer funded perk to learn Chinese.
    If aggressive tax cheating was outlawed would we be in such a mess? Does Jeremy have a view on that, given how partial he is to robust mitigation?
    Bloody hypocrites like him make me want to vomit.

  • rate this

    Comment number 240.


    You're not the first to see the truth, you won't be the last.

    Both Lincoln and Kennedy wanted to do it.

    Now what else did they have in common ?

  • rate this

    Comment number 239.

    1.Surely not
    3 Hours ago
    The 'Welfare State' is not broken.

    It's simply incredibly badly managed.

    You're right but like many, I am beginning to suspect it is badly managed so that justification can be sought for privatisation.

  • rate this

    Comment number 238.

    When will people realise! No money will be available for caring for anyone in the future! The way the economy works (corporatism), money is only allocated towards things that those who own money want to buy! Old and sick people do not have the money to pay for their care. People who own most money, do not want it "wasted" on the care of strangers (or "scroungers" as they like to call them).

  • rate this

    Comment number 237.

    233 "Why can`t our treasury..issue debt-free money. Take it out of the hands of the privately owned Bank of England?"

    And why on earth would the financial elite,who rule the world`s finances, allow that to happen?

  • rate this

    Comment number 236.

    The true scandal is that the elderly are not being cared for at all whether they pay or not. Either in Hospital or in Care Homes. Sheltered housing does not have 24hr wardens et. etc. the very point that some are dying of hunger, thirst and bad care shows that this country has become an evil minded ageist society and cannot wait for the elderly to go.Shame on you.

  • rate this

    Comment number 235.

    They just don't know what to do about us oldies who are unlucky enough to fall ill and need care. It makes me sick when I see taxpayers money squandered in all directions particularly to illegal immigrants and suspect Governments oveseas.The trouble is there are still a number of us oldies who remember the original 'Cradle to the grave 'promise and will be a thorn in their side -Trust them ? NO

  • rate this

    Comment number 234.

    How does this affect Wales? These changes apply to England and not Wales as I understand it. Why then is a global inheritence tax threshold freeze being imposed on Welsh tax payers. We in Wales are effectively subsidising social care in England??? Wrong!!

  • rate this

    Comment number 233.

    I don't get it, we're in massive debt because the Government has to borrow money from private financiers, at interest, to fund huge social programs. Then we're taxed to death to repay this interest on money created out of thin air?!

    Why can't our treasury simply do the same, but issue Debt Free money. Take it out of the hands of the Privately Owned Bank of England? These problems would dissipate.

  • rate this

    Comment number 232.

    Private sector just thinking profit, they don't have care quality, even some basic need. will you pay over £400+ per week with neglecting you? Isn't it better just have some one to come and look after you in your home? care home is night mare.. sorry base on experience what I saw few months ago.

  • rate this

    Comment number 231.

    I`m sure if the govt can afford to pay £19,000 a week to send Will and Kate to holiday in the Caribbean it can pay for it`s older citizens to get care.

  • rate this

    Comment number 230.

    This will be the first of many taxes which will go up for middle income earners over the next decade or so as the main political parties squeeze the majority of the population into a small band either side of the mean earnings.

    As more people stop paying income tax altogether more are pushed into the higher rate, and as the living wage takes hold those above it will have their pay reduced. Enjoy!

  • rate this

    Comment number 229.

    What is the point of commissioning Dilnot,, and then changing all his findings? I would guess that the majority of elderly having to sell their homes belong to the category of moving into Residential Care Homes, which are now exempted from the cap! My mother has Alzheimer's and pays £36K pa for hers in Portsmouth, and I have been told that that is cheap. I am VERY disappointed.

  • rate this

    Comment number 228.


    It doesn't take a rocket scientist to work out it's why immigration was allowed to soar.

    In the short term, in general, immigrants do contribute more than they take - surprised ? - the problem is this is a sticking plaster solution to the pensions situation.

    Low cost housing would assist massively, but that wouldn't serve the banks with their 'mortgages' now, would it.

  • rate this

    Comment number 227.


    It's not that unreasonable to expect people to fund their own social care"

    It is when over 50% of workers are at, or below, the median wage of £14k and required benefits just to keep a roof over their heads, or unemployed - conditions which are beyond their control in the vast majority of cases.

  • rate this

    Comment number 226.

    221 Ex Tory Voter
    I'm talking out the Liberal Party, introduced legislation that allowed the raising of taxes to pay for care of the poor - the first step to the welfare state. That is a matter of historical record.
    I don't disagree with that. My namesake railed against it, idolising freer nations fine examples.

    223 Whizz1967
    He did indeed say that, in a lecture to students in America :)

  • rate this

    Comment number 225.

    If we are so short of cash, why has the government reduced the tax for the rich while increasing the chances they have to avoid paying taxes? If we are dire need of money why are we funding wars all over the place?
    The reason VAT is stuck at 20% is because all the business's don't pay VAT, they get their accountants to fudge the books
    The people are getting shafted yet again by a Tory government

  • rate this

    Comment number 224.

    One thing that would ease the burden on care costs for the elderly would be legalising Euthanasia.

    Before you start marking this comment down, I'm not saying kill every old person! I mean, those that are suffering can choose to die with dignity, and there will be less strain on the system as a whole.

    I'm 31. I can't stand the thought of my kids wiping my bum or cleaning my puke when I'm 80.

  • rate this

    Comment number 223.


    If Josiah Stamp said as such,He was a forward thinking man and unashamedly full of a Moral Compass.A fine direction Indeed.I salute you...

  • rate this

    Comment number 222.

    I'm glad that people are having a serious discussion about the funding of social care, but considering that the government is going to be short on cash for decades to come, it's deeply irresponsible for the government (and a Conservative one at that) to be expanding social welfare provisions.

    It's not that unreasonable to expect people to fund their own social care.


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