Thousands of Scots will be dragged into paying inheritance tax under plans to cap elderly care costs in England.
The Conservatives have overturned a pledge to increase the inheritance tax threshold to £1 million. It will be frozen at £325,000 until at least 2019.
When the effects of inflation are taken into account, the move will leave thousands more Scots forced to pay the tax over the next six years, the Tory-Lib Dem Coalition has confirmed as it secures funding to create a new elderly care system in England.
Ministers say they want to end the scandal of pensioners being forced to sell their houses to pay for nursing homes. The Coalition will raise the limit at which people have to pay for care to £123,000 – up from £23,250 – by 2017 with a new cap meaning older people will only ever be charged a maximum of £75,000.
However, critics warn many people will still have to sell their house to pay for their care. And there were clams thousands would be dragged into inheritance tax – which kicks in at 40% – under the plans for a three-year extension of the freeze on the £325,000 threshold for individuals and £650,000 for couples.
Labour accused ministers of one of the fastest "U-turns" in history, just eight weeks after Chancellor George Osborne outlined plans for a rise in the inheritance tax threshold.
The Tories pledged in 2007 to increase it – in what was seen as a masterstroke that reportedly convinced then Prime Minister Gordon Brown not to call a snap election.
The Coalition yesterday confirmed Scots would be hit by the inheritance tax raid. How-ever, a spokesman said the Scottish Government would receive a so-called "Barnett consequential" – a proportion of the money – in the normal way.
The £75,000 cap is higher than the figure recommended by the Dilnot Commission.
Labour said it welcomed elements of the announcement, but described the plan as a "flawed prospectus" and warned homes "would still be lost".
The National Pensioners' Convention said the proposals "simply tinker at the edges" and that a £75,000 cap "will help just 10% of those needing care, while most will have to struggle on with a third-rate service".
However, Vince Smith-Hughes, from Prudential, said the new cap would enable people to "start planning".
Health Secretary Jeremy Hunt said: "We are trying to be one of the first countries in the world which creates a system where people don't have to sell their own home."
Scotland has a system of free personal care for older people both in their own homes and in nursing and care homes.
l The Scottish Parliament's finance committee has warned Scotland's public services are not equipped to meet the demands of a rapidly ageing population. The number of pensioners is expected to rise by 26% by 2035. In the same period there will be only a 7% increase in the working population.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article