“Proposing sustainable solutions to the social care calamity is warmly welcomed. However, to get the public on board the government will need to clearly outline what people will get for the social care premium. Transparency is the key term in all of this.
“The solutions also need to be a cross-party consensus as the report rightly highlights. A tug of war over social care policy will not win the favour of the public or instill the level of confidence in the policy needed for proper long term planning.
“The proposal to tax those over 65 could mean retirees paying an element of national insurance tax for the first time. However, it is not clear if there will be a threshold on which this is applied.
“MPs have rightly expressed concern about the impact on intergenerational equality in solving the social care funding crisis. The proposals to restrict the payment of extra tax to the over-40s goes some way to address this, but on the other hand they also state that an extra amount of inheritance tax would need to levied on estates above ‘a certain threshold’. This could actually serve to increase intergenerational inequality by stemming the flow of money down through generations.
“IHT is tax on assets that have already been taxed and is therefore unpopular. Any move to increase it is loaded with risk for politicians as rising house prices over a number of years could see ordinary people easily caught within a social care tax threshold in what will be viewed as a tax on property wealth.
“The Chancellor has already called for the comprehensive review of inheritance tax by the Office of Tax Simplification. This is a once in a lifetime opportunity to remove complexity and help the Conservatives fulfil their manifesto pledge to restore the contract between the generations. There is a risk that social care reform collides with this aim.”