U.K. Will Increase Inheritance Tax to Fund More Care for Elderly
By Robert Hutton - Feb 10, 2013 7:00 PM ET
U.K. Prime Minister David Cameron’s government will fund planned improvements to financial support for the elderly by raising more money through inheritance tax, according to two officials familiar with the plan.
Under plans to be announced today by Health Secretary Jeremy Hunt, the amount any individual pays for care in old age will be capped at 75,000 pounds ($118,000) before the government steps in. People with assets of less than 123,000 pounds will receive help sooner. The government’s aim is to encourage wealthier people to take out insurance to cover the 75,000- pound cap.
The extra cost will be partly funded by extending a freeze until 2019 on the level where people start paying inheritance tax on estates, according to the officials, who declined to be identified because the plans haven’t been presented to Parliament.
“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,” Hunt told the British Broadcasting Corp. yesterday.
The policy is based on a 2011 report by Andrew Dilnot, a former director of the Institute for Fiscal Studies. He recommended a cap of 35,000 pounds on what people paid, and said his plan would prevent people spending more than a third of their wealth on care costs instead of as much as 90 percent under the existing system.
To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
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