Changes to social care funding

What has been announced in the recent social care plan?

The headlines are…

  • A plan to finance adult social care through tax changes;
  • To ensure the social care system is better integrated with health care.

What are the proposed changes?

From April 2022 national insurance contributions for employees, employers and the self employed will rise by 1.25%. Dividend tax will also increase by the same amount.

The additional revenue will be spent on social care and NHS funding. Over the first three years of the scheme, it is anticipated that around a third will be available for social care i.e. approximately £10 billion.

What will that mean for me?

In term of what additional tax you’ll pay…

In terms of what one would have to pay for care….

In England, the current rules are that people with more than £23,250 have to pay for all of their care costs, with no cap in the maximum they contribute. Once capital reaches £23,250, there is a sliding scale of contributions. People stop having to contribute from capital once their assets reach £14,250, although they still have to contribute from any income received.

The proposed changes will mean that those with assets above £100,000 must meet all their care fees with a maximum payment towards care of £86,000.

Those with assets of between £20,000 – £100,000 will contribute on a sliding scale (plus income) but will not be expected to pay more than 20% of their capital assets in any one year.

Once an individual’s assets fall below £20,000, they will only have to contribute their income.

Average care costs in England for care funded by local authorities is in the region of £34,000 per annum. Costs tend to be higher for those self-funding with averages estimated to be in the region of £50,000 per annum.

The cost of care is increasing, predominantly due to:

  • Increased demand – an increasing older population, living longer with more complex health needs and also an increased prevalence of disability amongst working age adults;
  • Increased work force costs particularly arising from the introduction of the Living Wage

Our Life Planning team are friendly and experienced and are happy to deal with any queries you may have around care costs, deferred care fee arrangements, Powers of Attorney, Wills and general estate planning.  Please do get in touch either by email or phone 01904 624903

Hudda Morgan
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