A committee of social care experts, reporting to prime minister Theresa May, has been looking at revamping funding for elderly social care, according to the FT.
One of the proposals it is looking at using inheritance tax to recoup costs when elderly people die.
Such a tax was previously proposed by former prime minister Gordon Brown, when he suggested bringing in a 10% levy on all estates in addition to inheritance tax, currently charged at 40% on estates above £325,000 ($403,952, €403,952).
The UK chancellor Philip Hammond is expected to announce hundreds of millions of pounds in emergency funding for social care in the Spring Budget next week.
Chris Groves, partner at international law firm Withers, said: “The funding of social care in later life is prominent and there are good odds on an increase in inheritance tax or some other levy on death being introduced to fund care in later life.
Social insurance
Other ideas presented to the committee have included compulsory social insurance, reported the FT.
Similar to the system in Japan, this means that people over 40 pay compulsory premiums as a contribution towards the cost of care after the age of 65.
Another proposal suggested that everyone should be entitled to a benchmark level of free care, after which individuals’ contributions would be matched by the state up to a defined limit. Those on low incomes would qualify for benefits to fund care.
‘Dilnot cap’ delayed
Last November, a survey published by Just Retirement Partnership predicted that advisers in the UK are set to be inundated with work planning for long term care needs of savers.
In July 2015, the UK delayed plans to implement a £72,000 cap, known as the ‘Dilnot Cap’, on the cost of long-term care. The cap was expected to come into force from April 2016, but has now been delayed until 2020.
