The real inheritance tax: Social care costs explained

LETTER FOR POSTBAG
Somerset County Gazette

Imagine there are three pensioners whose finances are exactly the same. Each has a basic State pension plus occupational pensions totalling £285 per week. They each have £50,000 in savings and a house with no mortgage, worth £300,000.

One is able to live on without medical problems, and is able to leave £350,000 to his/her children. The second needs hospital treatment for cancer, which is free on the NHS. and is also able to leave a full inheritance. The other develops dementia and needs residential nursing care, which has to be paid for from the pension, savings and from the sale of the family home. He/she is allowed to keep just £31.80 per week from their pension. Statistics show the average cost of dementia care in Somerset is £1,621 per week, or £1,445 per week if residential care is needed for some other reason.

I calculate this total of £350,000 will be completely wiped out after 4 years 6 months, or less is inflation puts up costs, except for the residual sum of £23,250. That's not much, especially when the family who inherit that money have to pay legal and funeral costs. Well, it gets worse. When the pensioner in a Care Home has just £23,250 left, the Council tax payers of Somerset step in to share the costs until the pensioner has just £14,250 left, after which the Government forces all costs onto Council tax. In Somerset three quarters of The Council Tax we pay goes to pay for Social Care!

What about Inheritance tax, you ask ? Utterly irrelevant ! For a couple who leave their money (including their home) to their children on the death of the surviving spouse, you need to leave £1 million before I.T. kicks in. If someone leaves £1,200,000, the children would inherit £1,120,000. The Conservatives have just pledged to take out the value of the house from this calculation – that's the only bit that is not earned income which has already been taxed ! This means a multi-millionaire couple with a house worth £20 million and savings of £950,000 would pay no Inheritance Tax on the death of the surviving spouse. Compare that with the examples I have quoted of people with £350,000 losing almost everything because of Social Care charges

Is it fair that Pensioners whose children may have looked after them for many years before they needed full-time Care are being completely denied the human desire to pass on at least part of the assets they have worked for all their adult lives, when millionaires keep everything?

Paying for Social Care is the real Inheritance Tax that urgently needs cross-party agreement on introducing a fair alternative. So far only Labour and the Liberal Democrats have even addressed the issue 

National statistics show that 21% of deaths occur in Care Homes, where the costs are either eating away the resident's savings or being paid by Council Tax payers.

There are many other very important issues I have not addressed, such as the quality of Care and some older people occupying beds in hospitals because they really need Care Home places which are not available.

Do I have a personal stake in this issue ? Yes. I am 80. Were I to outlive my wife, I would be very willing to share a small part of my Inheritance with families who face the possibility of losing all of theirs, through Care Home fees. Call it an Inheritance Tax if you like, but wouldn't we all prefer the peace of mind of certainty that almost all of our Inheritance will go to our loved-ones, with no risk of losing it all?

Yours sincerely
Alan Paul