The government is considering the introduction of an inheritance exempt Care Isa in a bid to halt the social care crisis, according to a press report.
The proposal is being assessed as part of the government’s social care Green Paper, which is due for release in the autumn, The Telegraph reported.
Under the scheme, the Care Isa would be in capped in line with care costs, with the funds remaining being passed onto the family when the holder dies.
Figures published by The Telegraph revealed that over 4.3m people over 70 have Isa wealth averaging £40,000, in comparison with an average of £11,886 in cash Isas held by people in all age groups.
Conservative peer Ros Altmann said: “As these figures are an average, many will have much more saved, which could usefully contribute towards their future care needs – unless they have spent it all by the time they reach later life.
“If you haven’t spent your Isas before you pass away, the money will go into your estate and could be taxed at potentially 40% – so if you have large sums in Isas, there is the perverse incentive to spend them before you die.”
The proposals were lambasted as a “colossal mistake” by Tory health committee chair Dr Sarah Wollaston, however.
Dr Wollaston said the proposals would only support “wealthy people who can afford to invest and whose families benefit from paying lower tax on their inheritance if not used for care”.