ELDERLY CARE TAX BREAKS LIFELINE
May considering voucher scheme to help families with crippling costs
THERESA May is considering tax breaks to help families meet the crippling cost of elderly care.
As part of radical reforms to confront the social care crisis, middle-aged workers could be given rebates to ease the financial burden of looking after their parents.
Sources said the measures, which would mirror childcare vouchers, were a ‘real option’ as the Prime Minister finalised her election manifesto. Mrs May yesterday set out more detail of her plans for what she said was the most important election this country had faced in her lifetime. Touring TV studios five weeks before polling day, she insisted the Tories were the only party that ‘believed in lower taxation’. She also: Pledged not to increase VAT after the election; Said her government would target tax cuts at
middle and lower income working families;
Refused to rule out income tax or national insurance rises;
Insisted the state pension would increase each year of her premiership;
Announced a major crackdown on bosses who make millions while wrecking pension schemes.
The elderly care tax break would be designed to appeal to the ‘sandwich generation’ – those who find themselves looking after both their children and their elderly parents.
Childcare vouchers allow parents to put aside up to £ 43 a month from their salary without paying tax and use it for nursery care. Under the social care plan, the money would instead go
toward looking after elderly relatives. A senior Tory source confirmed the scheme was being considered at the highest level. Conservative campaign headquarters did not rule out the idea.
The source said: ‘I know that No 10 are looking at it. I know it’s a real option.’
Quizzed on the issue by ITV’s Robert Peston yesterday, Mrs May said she was examining how to ensure care was sustainable in the long term.
She added: ‘There is a lot of pressure on social care, I’ve said it’s to be dealt with in short-term measures, which is the £ billion extra we’ve put into social care in the budget. The medium term we need best practice across the whole country, and longer term we need a sustainable system of social care.
‘This is one of the long-term issues for this country that we need to address.’
Ministers are also looking at a salary sacrifice scheme to encourage younger workers to save for their care costs in old age, the Sunday Times reported.
Ros Altmann, a former Tory pensions minister, said tax breaks for social care were a very good idea and would help relieve the ‘agony’ of many families. She told the Mail: ‘Anything we can do to help people in work have a better chance of making sure their loved ones will be looked after will be good for society and good for them.
‘It’s a natural extension of how we have helped working mothers with children go back to work with childcare vouchers. It’s the same principle.’
‘Decades of high spending’
THERESA May last night ruled out a rise in VAT after the General Election as she pledged to cut tax for ‘working families’.
Describing the Conservatives as a party that ‘believes in lower taxation’, Mrs May said she had ‘no plans’ to increase taxes. But she insisted she would not make specific pledges she could not meet.
Her remarks appeared to confirm that the Tory manifesto would not repeat David Cameron’s so-called ‘tax lock’. In 2015 he ruled out any rise in income tax, National Insurance and VAT for five years.
The comments also backed up the story in Saturday’s Daily Mail that the lock would be replaced by a looser promise to reduce the ‘burden of taxation on working people’.
VAT was increased from 17.5 per cent to 20 per cent by George Osborne after the 2010 election. Critics say raising VAT hits the poorest and those on fixed incomes the hardest.
Yesterday, labour’s shadow chancellor John McDonnell promised not to increase the tax on goods and services if Jeremy Corbyn becomes Prime Minister. Mrs May’s pledge followed soon after.
She told Robert Peston on ITV: ‘In relation to specific taxes, we won’t be increasing VAT.’ She added: ‘ We have absolutely no plans to increase the level of tax. But I’m also very clear that I don’t want to make specific proposals on taxes unless I’m absolutely sure that I can deliver on those.’
Mrs May continued: ‘ But it would be my intention as a Conservative government and a Conservative Prime Minister, to reduce the taxes on working families.’
She also dismissed labour’s economic policies as ‘nonsensical’.
Mrs May has repeatedly refused to re-commit to the tax lock pledge, and Chancellor Philip Hammond said blanket promises ‘constrain the ability of the Government to manage the economy flexibly’.
In his Budget earlier this year, he attempted to hike National Insurance payments for the selfemployed, but was forced to reverse the policy following an outcry over the manifesto pledge.
Mr Hammond wants to abandon the state pension ‘triple lock’ and replace it with a promise to reduce the ‘burden of taxation on working people falling’ as the economy grows, the Mail reported last week.
The triple lock ensures pension payments rise in line with inflation, average earnings or 2.5 per cent, whichever is highest. It was also reported yesterday that capital gains tax – currently 28 per cent – could be levied on homes owned by the ‘super rich’ worth £5million or more. Currently, the tax only affects second homes.
While Mrs May did not comment directly on the proposal, her officials later dismissed the reports as ‘rubbish’ and ‘wrong’.
Such a tax would show labour voters considering backing Mrs May that the Tories were happy to make the rich pay their fair share of tax. However, it would risk alienating traditional Tories.
The Prime Minister also pointed out that the top 1 per cent of earners are paying more tax under the Conservative Government ‘than they did in any year under a labour government’.
last night critics urged Mrs May to pledge to cap the overall burden of tax at 35 per cent of GDP.
Dia Chakravarty, political director of the TaxPayers’ Alliance, said: ‘It is deeply concerning that Mrs May is not ruling out the possibility of tax rises on an already highly taxed population.
‘After decades of high spending we desperately need a government which understands the importance of fiscal restraint in order to boost economic activity and productivity.’
Pressed on pensions, Mrs May said the state pension would increase every year of her Premier- ship – but refused to commit to the triple lock introduced by her predecessor Mr Cameron.
Officials are considering whether to continue this pledge until 2020, as the former prime minister planned – but replacing it with some form of ‘double lock’ afterwards, saving billions of pounds.
Mrs May said she wanted to ensure there was ‘intergenerational fairness’.
Separately, as part of a major pensions crackdown, the Prime Minister announced that ministers would target the ‘ injustice’ of workers losing their pensions in corporate takeovers.
There would be new powers for regulators to ensure pensions are protected and stop takeovers if they are being used to hit pension funds.
Mrs May announced tougher powers to go after company owners whose actions would ‘destroy people’s pensions for the future’, including fines for bosses who ‘ wilfully left a scheme under-resourced’.
It was dubbed the anti-Philip Green charter after the former BHS boss – who sold the chain for £1 a year before it went bust – left the company with a £571million pension deficit.
Amid demands to strip him of his knighthood, he offered £363million to rescue the scheme.