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Tax breaks proposed for families caring for relatives

Tax breaks proposed for families caring for relatives

Conservative leadership candidate Jeremy Hunt (pictured) has unveiled a series of proposals to tackle the social care funding crisis, which includes a tax break for families who look after their loved ones in their own homes.

According to media reports, should he become prime minister, Mr Hunt wants to establish a 10-year funding plan for the social care system, which would see families able to apply for tax relief if they choose to adapt or extend their homes to accommodate their elderly relatives’ needs.

The current foreign secretary is also proposing to promote long-term saving schemes, similar to the idea suggested last year by the government of creating a system akin to pensions auto-enrolment, but for social care.

At a leadership hustings in York Mr Hunt also vowed to introduce an overall cap on lifetime care costs, and increased public spending for social care from the government’s £26bn ‘headroom reserves’.

The proposals will be contained in the long-awaited green paper, which Mr Hunt promises to publish within 100 days of becoming prime minister. 

It is estimated just 12 per cent of adults aged 55 or over are currently putting aside money to pay for social care later in life.

Former prime minister David Cameron had promised to implement a cap on the cost of care of £72,500, which was supposed to come into effect in April 2016.

But in 2015 the government pushed this back to 2020, because it would have added £6bn to public sector spending at a "time of consolidation".

In December the government confirmed the proposed cap would be scrapped while a green paper on long-term reform was put together.

The publication of this paper was originally expected in the summer 2018 but has faced several delays but the government has said it will become public "in due course".

Sir Steve Webb, director of policy at Royal London and former pensions minister, has already criticised part of the new plan, specifically the proposal that would see individuals save for later life care in a similar way they do with their pension.

He said: "It is welcome to see a candidate for prime minister coming forward with ideas on tackling the social care crisis. 

"But there is a real risk that creating a new system of automatic enrolment for care costs could undermine the massive achievement of getting ten million workers enrolled into workplace pensions."

Sir Steve is arguing that these plans would greatly increase the complexity of the system, with individuals presumably able to opt out of either or both schemes. 

He added: "Young people in particular are likely to attach very little value to saving for a cost which may not affect them for over half a century. 

"Helping people to build bigger pension pots so that they can buy care insurance later in life would be a very positive step. Setting up a rival system of automatic enrolment would not."

maria.espadinha@ft.com

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