8th March 2013

Measures introduced through the Care and Support Bill come into effect in April 2017

Bills for long-term care in old age are to be capped at £75,000 in England. The recent announcement for changes to social care is thought to be part-funded by a freeze on the inheritance tax ‘nil rate band’ threshold.

Chancellor George Osborne announced during the Autumn Statement 2012 that inheritance tax rates would rise from £325,000 (£650,000 for married couples and registered civil partners) to £329,000 (£658,000 for couples) in 2015/16. This will now be delayed until 2018/19. As a result of this three-year extension, more people could be subject to an inheritance tax bill. Inheritance tax is charged at 40 per cent and is payable when the value of an estate exceeds the available nil rate band threshold.

Disappointment at the level of the cap
Jeremy Hunt, the Health Secretary, told the Commons in February that the ‘historic’ long-term care reforms would save thousands of people from having to sell their family home to pay for care. Some campaigners voiced their disappointment at the level of the cap, which was more than double the £35,000 recommended by the independent Dilnot Commission in 2011.

Means-tested government support
Alongside the cap, Mr Hunt announced a rise – from £23,250 to £123,000 – in the asset threshold beneath which people will receive means-tested government support for care bills. He also announced a lower cap on costs for people who develop care needs before retirement age, as well as free care for those who have needs when they turn 18.

Andrew Dilnot, whose report recommended a cap of between £25,000 and £50,000, said he was disappointed by the government’s proposal of a higher level, but did not think it would undermine his system.

The proposed £75,000 cap from 2017 equated to £61,000 at 2011 prices, he pointed out.
The measures will be introduced through
the Care and Support Bill and come into effect in April 2017.

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