Enter to open, tab to navigate, enter to select
IHT nil rate band freeze extended to pay for social care proposals
Practical Law UK Legal Update 0-524-1301 (Approx. 3 pages)
IHT nil rate band freeze extended to pay for social care proposals
by PLC Private Client
| Published on 13 Feb 2013 • United Kingdom |
The inheritance tax nil rate band will be frozen for a further three years from 2015-16 to meet part of the costs of changes to social care funding, the government announced on 11 February 2013. (Free access.)
Speedread
The Secretary of State for Health, Jeremy Hunt, announced on 11 February 2013 that the inheritance tax nil rate band would be frozen at £325,000 for a further three years from 2015-16, to meet part of the costs of changes to the funding of social care.
If you don't yet subscribe to PLC, you can request a free trial by completing this form or contacting the PLC helpline.
Inheritance tax nil rate band frozen
The Secretary of State for Health, Jeremy Hunt, announced on 11 February 2013 that the inheritance tax (IHT) nil rate band would be frozen at £325,000 for a further three years from 2015-16. The freeze will meet part of the costs of changes to the funding of social care that he announced at the same time.
This announcement overturns the one made by the Chancellor, George Osborne, in his 2012 Autumn Statement that the nil rate band would increase to £329,000 in 2015-16. Both announcements override the default indexation of the nil rate band to the consumer prices index (CPI), which would otherwise begin from 2015-16 (section 208, Finance Act 2012).
The nil rate band has been frozen at £325,000 since 2009-10. The latest announcement will carry this through to 2017-18, a total period of nine tax years if implemented in full.
To follow the progress of this measure, see Private client tax legislation tracker 2012-13: IHT: nil rate band. For information about IHT rates and limits, see Tax data: inheritance tax.
Changes to social care funding
The government's proposals on social care funding form part of its response to a report published in July 2011 by the Dilnot Commission on Funding of Care and Support (see Legal update, Dilnot Commission publishes report on adult social care).
The key changes to social care funding are that, from April 2017:
- The limit on capital assets that an individual can have while remaining eligible for public funding will be raised from £23,250 to £123,000.
- Financial contributions towards the cost of care will be capped at £75,000. The government hopes that the cap will allow individuals to use insurance or other financial products to plan for care costs.
For a summary of the current rules, see Practice note, Care costs: overview: Means tested care.
For information about wider social care measures proposed by the government before this announcement, see Legal update, Consultation on draft Care and Support Bill: local government implications.