Thousands more could be hit with inheritance tax

Thousands more people are likely to be hit with inheritance tax to pay for an extension in state support for elderly care.

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.

The move, 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 point of what we are doing is to protect people's inheritance. 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."

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

Comments (2)

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3:27pm Sun 10 Feb 13

Torchie1 says...

If people believe they will be caught in the IHT trap there are many ways that a financial advisor can suggest to legally avoid it.
If people believe they will be caught in the IHT trap there are many ways that a financial advisor can suggest to legally avoid it. Torchie1
  • Score: 0

3:59pm Sun 10 Feb 13

Lone Ranger. says...

Isnt it strange although not at all surprising from old Slippery Dave. ..
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He appoints the Dilnot Commission to carry out an independant report re Social Care and the contributions that should be made.
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He totally ignores them and sets his own figure of DOUBLE of the Commissions recomendations.
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I wonder how much money he wasted on that report.
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Isnt it strange although not at all surprising from old Slippery Dave. .. . He appoints the Dilnot Commission to carry out an independant report re Social Care and the contributions that should be made. . He totally ignores them and sets his own figure of DOUBLE of the Commissions recomendations. . I wonder how much money he wasted on that report. . Lone Ranger.
  • Score: 0

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