The government plans to freeze the inheritance tax threshold at £325,000 for three years from 2015 to fund a £75,000 cap on long-term care costs, according to reports.
The move comes despite chancellor George Osborne’s Autumn Statement pledge to raise the threshold by 1% to £329,000 for individuals, and £658,000 for couples, in 2015/16.
The care cost cap, expected to be announced today, will be implemented from 2017, although it will not apply to accommodation costs.
Under the government’s care reform plans, those with assets of up to £123,000 will qualify for some state help. Currently the limit is set at £23,250.
Health minister Jeremy Hunt (pictured) told the BBC: ‘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.’
Then cap is higher than the £35,000 level proposed by economist Andrew Dilnot, who was tasked by the government with producing a report into long-term care reform, after the Treasury baulked at the £2 billion annual cost of implementing those measures.