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Based on the recommendations of Andrew Dilnot the government will be reforming the way that people pay for their care from 2017. Although these reforms will provide extra help for people who face very high care home costs they come with caveats.

The government is introducing a £75,000 cap on the costs an individual has to pay to meet their care and support needs over their lifetime. This means that once an individual has paid £75,000 towards their care home fees, the government will pay the rest. This cap only applies to people with “eligible” needs which are yet to be defined and does not include general living costs such as food and accommodation.

The threshold for means-tested support for adults in residential care is also being increased from between £14,250 and £23,250 (the figures today) to £17,500 – £123,000 (the figures as they will be in 2017). This means that if you fall in between that bracket the government will provide you will some financial support.

There will also be the option of deferred payment so that people who cannot afford their reasonable residential care fees will not have to sell their house during their lifetime to cover their fees. Instead they can defer the sale until after they pass away.

The government will fund the new reforms by freezing the tax free allowance each of us has for inheritance tax. The nil-rate band is currently frozen until April 2015 at £325,000 for individuals. This freeze is now set to continue for a further 3 years from 2015-2016.

If you need any advice about protecting your assets from inheritance tax or care costs, contact Karen Witter – partner in our Private Client department – karen.witter@dbf-law.co.uk

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