Social Reform – A Bold Step?

The Government is trying to grasp the nettle of both backlogs in the NHS, partially as a result of the Covid 19 pandemic and the great costs of paying for later life care. Boris Johnson’s Government yesterday evening successfully received the backing of sufficient MPs to push ahead with the proposals.

So, what has been put forward? People will no longer pay more than £86,000 in care costs over their lifetime with a targeted implementation date of October 2023.  It is really important to stress that this is the cost of Personal Care and not the care home accommodation itself. The accommodation aspect often being quite a sizeable proportion of the ongoing care fees cost. Once the cap has been reached, Personal Care costs will be funded by the Local Authority.

Additionally, those with assets between £20,000 to £100,000 again, will get means-tested help towards Personal Care costs from their Local Authority. Assets could well include the value of your property although there are a number of property disregards which may well mean that this asset is set aside. Those with assets below £20,000 will not have to use these savings towards their Personal Care cost but are likely to have to contribute from all or some of their income.

These changes will be funded through, National Insurance (NI) which working people (the employed and self-employed) and their employers pay.  NI will rise from April 2022 by 1.25%.  From April 2023, this extra payment will become a separate tax known as the Health and Social Care Levy.  It is proposed that this will be shown as a separate entry on payslips.   For individuals who continue to work beyond State Pension age, they will pay the 1.25% Health and Social Care Levy.  Finally, an additional 1.25% will be charged on Dividend Income, typically from share portfolios or collective investments once the Annual Allowance of £2,000 has been utilised.   This will also impact on family owned limited companies where directors typically pay a portion of their remuneration in this way.

Social Care and funding the NHS have always been a political hot potato.  So, whilst the Government perhaps deserves some praise in looking to try and address this issue, I cannot see that it will have too much of an impact on the bulk of the client that Wingate advise on a regular basis when trying to address the significant costs of self-funding longer term care.

If you would like to discuss later life care needs do contact your usual Wingate adviser or  the SOLLA accredited advisers  (Society of Later Life Advisers) within the team.

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