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Britain Tax: Warning of capital gains tax risk to 150,000 care home residents

Thousands of elderly people who live in care homes could be the innocent victims of the UK Government's controversial capital gains tax grab.

Around 150,000 Britons live in care homes but still own the home where they used to live before poor health forced them to leave.

Experts warned yesterday they could be penalised by capital gains tax (CGT) bills because their former family home could be treated as their 'second home'. This can happen once they have lived in a care home for three years.

CGT is not charged on the sale of anybody's main residence - but it is levied on second homes. At present, capital gains tax (CGT) is charged at 18 per cent on all gains made each year over the annual exemption of £10,100.

But it has been proposed that the rate rise to 20 per cent for basic rate taxpayers, 40 per cent for higher rate taxpayers and even 50 per cent for the top taxpayers.

Tony Banks, chairman of Balhousie Care Group, said many residents of care homes meet their bills by selling their family home.

The average bill for a nursing home is £35,100 a year, or £24,500 for a residential home with no nursing care.

Mr Banks said: 'It would be grotesquely unfair of the Government to impose their proposed changes in capital gains tax (CGT) upon the 150,000 old folk who already live in care homes.'

Paul Green, from Saga, said: 'The rise in capital gains tax (CGT) has been put forward by the Lib Dems as a way of stopping fat cats taking their income as capital. But these are old people who desperately need this money.'

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