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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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Forum Editor

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"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."

I sometimes wonder if people grasp the fact that government revenues are public funds for public expenditure. Governments (as well as consumers) can only spend money once, and if there isn't enough in the pot for something that society needs it either has to be raised by taxation, borrowed, or something else has to be shelved.

Public expenditure can create wealth in an economy, but the money has to be there in the first place. Capping residential care costs is an excellent proposition, but the resulting extra load on the public purse must be relieved in some way, or other public services will suffer. Surely it's better to allow old people a better chance of hanging onto their homes until the end of their lives, rather than forcing them to sell it to fund their care, even if it means that their heirs do inherit a slightly smaller asset because of inheritance tax?

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Quickbeam

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spider9

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

It would be recouped later as it was spent. £100k spend over a decade provides various taxes and employment by the retail trade that takes your spending money.

Yes, I know that that's a Utopian notion that can't be put in place at the drop of a hat, but that's the direction that we should be moving in. Where's the sense in taxing Peter's pension funds today, to pay Paul's pension credit tomorrow?

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spider9

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Quickbeam "It would be recouped later as it was spent"

The shortfalls are created now, so tax is needed now.

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Quickbeam

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Like I said, we need to work towards it.

All governments throughout the 20th century have wanted their jam today. It's time they did what they keep telling us to do and saved prudently for the future.

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spuds

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"It's time they did what they keep telling us to do and saved prudently for the future"

But the problem I seem to have, is that I try to take government or 'expert' advice 'for the future', and it still doesn't work out.

In all my working life, I thought that I would make all the necessary provisions, so that I would not be a burden on the state or public in general. Possibly the very same, thousands of others have thought. But I find that those long term plans are beginning to come back and haunt me.

Should I have been a responsible citizen all my life, paying all my dues when requested. Or should have spent everything, with the attitude of "Stuff That", like some seem to survive very well on?.

I know a number of people whose retirement plans, and their thoughts on providing for their children's and grand children's future have had to have serious rethinks, especially regarding equity on property. On certain points, the rules seem stacked against those that want or wanted to be good citizens, against those they did not see their contributions to society as an important requirement.

A point was made about asking for education contributions back, should I add to that many other things that I have possibly not received, yet paid for over many years?.

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Quickbeam

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If I was leaving school again in 1972, armed with what I know now, I would simply just buy a gold sovereign as and when I had the money for one and sit on them until retirement, when I would go and sell as and when needed for living expenses.

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spider9

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spuds

I'm a bit confused about your position.

You say "I would make all the necessary provisions, so that I would not be a burden on the state or public in general"

It appears you have done just that and can live out your time and afford any care costs (as this was your express purpose when saving, was it not?). It wasn't, presumably, so that your kids (who, if they follow your attitude, would already be planning for their own retirement) could inherit your savings.

The 'stuff it' argument you put forward also means you would have little choice of care facility, and definitely not the better conditions if you can supplement care from your own means. Personally, the idea of total reliance on the State would be very worrying - but each to their own choices.

Quickbeam

If we were all armed with that information in 1972, then playing the stock markets would have been a doddle, and I guarantee better returns would have been possible, rather than just concentrating on gold!

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Quickbeam

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But without foresight, it is however a safe bet to buy gold as a school leaver compared to stocks. It has it's ups and downs, but always trends up. And after 50 years of working, each sovereign that was about a fiver then if my memory is right now selling for around £300 is a very good investment.

Scale that up to a 3 bed property (the other safe investment) that was about £5000 in the early '70s now going for about £150,000 (S Yorks price comparison) that equates to half the current gold value at £300,000.

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Quickbeam

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Do I need to point out to anyone that this is the simplest of simple investment suggestions?

I wouldn't recommend anyone planning a retirement portfolio to go by the above simple calculation!

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oresome

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There is considerable emotion attached to selling ones home to finance care costs, but what is the point in maintaining a empty home while living out your remaining years in a nursing home, especially as we have a housing shortage?

Many people have benefited from rises in property prices and this forms a substantial percentage of their wealth. No tax has been paid on this capital gain. It hardly seem fair that the general taxpayer should finance the entire nursing home costs while relatives receive a large inheritance.

The object of the Governments proposal is to set a ceiling on costs so that the Insurance industry can produce a suitable policy that will cover care home costs at affordable rates. Perhaps if the relatives fancy the house, they can pay the premiums on the insurance policy.

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