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Social Care and Inheritance Tax.


spider9
Resolved

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Good to see the Government tackling this issue, but if Inheritance tax is to be used to pay for the care in England, will that mean there will be a different tax policy for Scots - or will people living up here be subsidising (once again, some might say!!!) the poor Southern folk because their Inheritance tax will go up as well, yet only those in England will benefit?
Or will Westminster increase the grants to Scotland to cover this anomaly?
Or will Inheritance Tax threshold be held at the same level as it is now in Scotland, so only the English pay for their own improvements?

Oh, the complications!

Social care

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fourm member

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spider9

'Oh, the complications!'

Indeed. But there are always complications when you try and match a tax to an expense. When the actual announcement is made it will be interesting to see what is said about any offsetting or matching.

It's a slippery path because, as carver has said, I have no children so any sign that there is matching going on would have me asking for my contribution to education back.

On carver's comment, having no children actually makes me a good example of the problems of this proposal.

But let's not make it too personal. Suppose someone with good savings plus a 3 bed flat in Islington (current value £750k so £500k is not a lot) has no offspring and has a will leaving their estate to a cats' home. Is it really going to be the case that, if they need residential care, their contribution will be capped at £75k and the cats get the rest at the expense of taxpayers?

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Forum Editor

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"Is it really going to be the case that, if they need residential care, their contribution will be capped at £75k and the cats get the rest at the expense of taxpayers?"

That's the problem in a nutshell. Someone in our family is retired, has no children, is wealthy, and is going to leave a substantial fortune and a beautiful old house to a dog rescue charity. If he and his wife end up needing residential care, and their contributions are capped, the dogs will get a big pile of money, and you and I will be paying a share of the care home costs.

It makes little sense, and there's a long and convoluted legislative road to travel before it does.

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Flak999

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I may as well mortgage the house up to the hilt, spend every thing on either the kids the wife or myself and have no capital left.

I think more and more people will be coming round to this way of thinking! Why be responsible all your life, save, pay your dues umpteen times over and then get shafted in your dotage?

Spend it all whilst you can on wine women and song, buy that new car, have those foreign holidays, give the money to the kids when they need it, then throw yourself on the tender mercies of the state when you don't have a brass razoo to your name!

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lotvic

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I don't think it should be capped. I think spider9 had it right "do away with the Inheritance Tax Allowance altogether" and people should be paying for their own care if they have the sort of money you are all discussing.

Certainly those with a lot less are having to sell their modest homes when they are taken into care. I could name at least half a dozen of my (now former) neighbours who had to do just that. Social Services handled the sales.

As for 'throwing yourself on the tender mercies of the state...' I have an Aunt who is in one of those miserable 'care' homes. It's not the luxury you all seem to think. Social Services have placed her in a mixed home and she gets old men wandering in during the night because they've got the wrong room. The Home seems to have an overlying smell of urine. She is not allowed to have any money or valuables in her room (the pitiful pocket money allowance is kept in the office safe and she has to ask the owner to make any purchases) She hates it.

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Quickbeam

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Did this used to be the Logan's Run thread?

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Quickbeam

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Nobody seems to appreciate that all these moves over the past few decades to use peoples own monies and assets to pay for age care has a pretty limited period over which it can save government spend on age care.

What's happening now is that less elderly people are considering it their duty to leave the family with all the wealth of their accumulated assets, and are choosing to cash in the equity of their assets for financially comfortable early retirement years while they are still active. Which of course in turn will leave them in need of the same total care costs as those that had never saved a penny.

That's the way I intend to finance my early active retirement years to make up the shortfall from the decades of tax raids and incompetent pension fund management. And then in 30 years time when that's considered the norm, and everyone is doing that, we'll be back to square one.

But hey ho, that won't be my problem when I'm sitting staring out on an increasingly scary and alien world from the safe windows of the care home, drooling and dribbling waiting for a call from God...

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fourm member

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'there is not many people sitting on 500K'

In 2009/10 there were over 22,000 estates valued at over £500k. That's about 4% of all the deaths.

It interests me that people get irate about bonus payments to bankers but seem to be happy to subsidise the wealthy dead.

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Quickbeam

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By my simple reasoning, there should be zero inheritance tax on money or assets, whatever the size pot left.

Tax has been paid in the accumulation of the money, tax is paid on the monies interest accumulation as savings. Tax is paid by whoever inherits it if they miser it away in a savings account and tax is paid on it if they spend it. But the biggest advantage is that if more is left to spend, it's spend keeps people in work, weather it's shop workers or building workers for your new extension, which in turn boosts the economy.

Snatching money while the dead are on the slab is counter productive in the long term, it only provides day to day pocket money for the government. And any government that's living hand to mouth isn't a good enough government.

How many times should the same money be taxed?

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spider9

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Quickbeam "there should be zero inheritance tax on money or assets"

Exactly where do you suggest the tax shortage, by such a measure, would be made up?

At present the government needs all the tax it can get (and more), so doing away with a source such as Inheritance Tax would be ludicrous, unless it is replaced elsewhere by higher income tax, VAT etc?

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spider9

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fourm member "would have me asking for my contribution to education back"

I have sympathy with that position, and it directly demonstrates the inherent Scottish problem - where there is devolvement of the Social Care but not of the taxation to pay for it.

I would have less expectation that the Scots would bear their injustice with the same equanimity as you bear yours!

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