Only wealthy will benefit from ‘Care ISA’ to fund end-of-life care, Sarah Woolaston
The Tory head of the Commons Health and Social Care Committee has dismissed proposals for a “Care Isa” that are reportedly being considered by the Government.
Sarah Wollaston said the Isa, which would be immune from inheritance tax, would not solve the crisis in social care “at all” and would only work for a “small minority of wealthy people”.
The Sunday Telegraph reports that the Treasury has been reviewing proposals to include the new Isa in the social care Green Paper due to be announced by the Government.
Isas are currently taxed at death, which is said to give people the “perverse incentive” to spend money they may need for end of life care.
The proposed Isa would be capped to reflect care costs and any money left over at death would be passed on to the holder’s family without being taxed.
Dr Wollaston, who is chairwoman of the influential committee of MPs, quickly rejected the idea.
She wrote on Twitter: “This won’t solve the care crisis at all. There is no pooling of risk.
“It only ‘solves’ it for a small minority of wealthy people who can afford to invest and whose families benefit from paying lower tax on their inheritance if not used for care.”
According to the Telegraph more than 4.3 million people over 70 have an average of £40,000 in Isa wealth.
Meanwhile more than 12 million over 50s have saved tens of thousands of pounds into Isas.
Baroness Altmann, the Conservative peer and former pensions minister who gathered the figures, told the paper the money could “usefully contribute towards their future care needs, unless they have spent it all by the time they reach later life”.
“If you haven’t spent your Isas before you pass away, the money will go into your estate and could be taxed at potentially 40%, so if you have large sums in Isas, there is the perverse incentive to spend them before you die.”
A Department of Health and Social Care spokesman said: “Our green paper due in the autumn will set out our plans to reform the social care system to ensure it’s sustainable for the future.
“In developing the green paper we are looking at how we can support people with the costs of their care in a way that is fair to all generations.”
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