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Latest announcements re inheritance tax and paying for care - Carers UK Forum

Latest announcements re inheritance tax and paying for care

All about money
Can anyone explain in simple language the latest announcements re paying for care and inheritance tax. Just seen the news, and it's as if someone has left a vital sentence out. What is the direct relationship between the two?
Can anyone explain in simple language the latest announcements re paying for care and inheritance tax. Just seen the news, and it's as if someone has left a vital sentence out. What is the direct relationship between the two?
the additional income raised from leaving inheritance tax at it's current low threshold will help to fund the rise in the threshold at which we have to start paying for care. If you currently have more than £23,500 in savings then you have to pay for your care until you go below that limit at which point the state picks up the tab. The savings limit is to rise to £125,000 (or thereabouts, can't remember exactly) which means the state picking up the tab earlier.

The threshold for paying inheritance tax is currently £325,000 and will stay at this level till 2018. With the continuing rise in property values this means that more people will be liable for inheritance tax in the future. So the additionally tax raised from the one is to help fund the other.
Thanks Susie, the TV made it far more complicated than that, really good news if my mum ends up in residential care. Of course the difference is that for the TV people it's just another story, if they are not familiar with the current arrangements they can't do the comparison as you have done. It might be worth mentioning here, for the benefit of others, that if a husband dies without making use of his inheritance tax allowance, it then passes to his wife. So in my case, as my OH didn't use his allowance, the inhertance allowance for me will be £325,000 multiplied by 2 - to give £650,000 in total.
actually BB this might explain it better and in more detail

http://www.bbc.co.uk/news/uk-politics-21403679
I still don't get it though.. dad would still have to cough up £75,000 if he went into a home (which he won't because i look after him).. he would still of had to sell his home in order to raise the £75.000.. presumably anyone whoose home is worth more than £125,000 would still have to sell it to raise the £75,000...or am i missing something? Image
I still don't get it though.. dad would still have to cough up £75,000 if he went into a home (which he won't because i look after him).. he would still of had to sell his home in order to raise the £75.000.. presumably anyone whoose home is worth more than £125,000 would still have to sell it to raise the £75,000...or am i missing something? Image
Currently the average care home fees run at approximaely £30,000 per annum - assume that most care home residents live for a further 5 years - that's £150,000 which they have to fund entirely. Under the new scheme the resident's contribution would be capped at £75,000 no matter how long they live.

Currently you get no 'state' help with fees if you have assets worth more than £23,250 in savings - under the new scheme you would be eligble for help once your assets drop below £123,000.

Also bear in mind that the 'cap' of £75,000 refers to basic nursing care; board and lodging in a care home will still have to be paid for.

There are a number of ways that care fees can be funded without necessarily selling the family home - equity release, an annuity designed for the purpose. Also remember that people of pensionable age will have their state pension to put into the pot together with any other benefits that they may be entitled to (like Attendance Allowance, pension credit etc).

And finally none of this is due to happen for a number of years (2019 Image ) so is not going to help those currently in care homes and a future government may very well move the goal posts again or even rescind the reforms announced yesterday.
Trouble is that the devil is in the detail. Property prices round here are still on the way down, and if that is mirrored in other parts of the country, then fewer will be paying inheritance tax, so the sums don't add up.

The funding problems with social care are already entrenched. Another 4-5 years will do nothing to help those needing help now.

And the £75,000 is an estimate based on the average cost of care, and extrapolated out for a fixed period (around two and a half years, I think). So you have to wait the two and a half years before getting help - and that means some people will pay rather more than £75k. Add to that the "hotel costs", and the fact that the average stay in a residential home is two years, and it's hard to see what real benefit this will bring. Looks like I'll have to get the calculator out...