UK News Will new social care cap stop you having to sell your home?

02:20  28 november  2021
02:20  28 november  2021 Source:   dailymail.co.uk

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Funding of social care in England is undergoing a major overhaul. New Government proposals were voted through by MPs last week and are now heading to the House of Lords for review.

Further tussles in the House of Commons and Lords are likely, but within weeks we should have confirmation on how much people will have to pay towards care costs. Here is what the current proposals will mean.

What is changing?

From October 2023, the most that anyone will have to pay for personal care over their lifetime will be £86,000. Currently there is no cap. Anyone with less than £100,000 in assets will also be eligible for some financial support from their local council. This is a significant rise from the current level of £23,250. Assets include savings, investments and property, including the family home. Anyone with less than £20,000 in total will not have to pay anything towards their care from their assets. This is a rise from £14,250 at present.

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What do the new rules cover?

The cap will apply to the cost of care, whether given at home or in a care home. For example, the cost of help with washing and dressing. However, it does not cover daily living costs – for example rent, food and utility bills. Living costs for people residing in a care home will be set at £200 a week. Those costs will not count towards the lifetime cap of £86,000.

Why is this happening now?

More than a million people in England are receiving social care. This number will rise as the population ages.

Under the current system, the cost of care can be eye-watering. People who have diligently saved all their lives can have their nest eggs wiped out in a few years, leaving them with nothing to pass on to loved ones. Around one in seven adults aged 65 currently face lifetime costs of more than £100,000.

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However, deciding what care costs should be picked up by an individual requiring care and what should be paid by the State is a thorny issue. Successive governments have failed to tackle it – and kicked the can down the road.

The new proposal is designed to offer greater certainty to families about what they will be expected to pay to make it easier to plan.

Why is it controversial?

Last week, the Government won a vote to change its plans so that council contributions to care fees do not go towards the new £86,000 spending cap. Only contributions from someone's own savings and income count. The Government says it wants to ensure that people who get council support do not reach the cap at an artificially faster rate than others.

But critics say those who receive such support tend to be poorer. By introducing this rule, households with the lowest incomes and smallest assets will be asked to pay a bigger proportion of their overall wealth to fund care costs. They are also more likely to have to sell their homes. Helen Morrissey, pensions and retirement analyst at wealth platform Hargreaves Lansdown, says: 'This amendment comes as a huge blow to anyone with lower levels of assets, especially people in the North, where house prices tend to be lower than further south.'

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Will people have to sell their home to pay for care?

Some will. The lifetime cap on costs does not cover living costs, which can add up to considerably more than the cost of care itself. However, anyone in this position can apply to have the sale of their home delayed until after they die. In this instance, the council pays the care costs upfront and then reclaims them from the sale of the home after the homeowner passes away.

How can I plan for the cost of social care?

It's all but impossible to predict whether we might need care, what kind and how long for. The new rules should at least make it easier as they lay down how much, in the event we do need care, we will be required to pay. It is hoped that in time, the insurance industry may offer products that provide cover for social care costs. Tom Selby, head of retirement policy at the wealth platform AJ Bell, believes policymakers may need to incentivise people to save for social care.

For example, he suggests the Government could introduce an Isa for saving for care, which might include an upfront bonus, but where withdrawals could only be tax-free if used to pay for care.

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When does the cap start?

The cap will be introduced in October 2023. It will be implemented for adults of all ages, without exception. Costs accrued before this date will not count towards the cap.

Where will it apply?

The cap will be introduced in England. Scotland, Wales and Northern Ireland have the power to set their own social care policies.

Finally, how will it be paid for?

Both employers' and individuals' National Insurance Contributions will rise by 1.25 percentage points from April next year to pay for social care and help fund the NHS. From April 2023, this payment will become a separate tax, called the Health and Social Care Levy.

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Social care is in a staffing crisis and we think Outt can help' .
Steve O' Brien is the co-founder and CEO of newly launched app, Outt. It campaigns for social care worker rights and helps them find work more easily by cutting out the agenciesTough working conditions, Brexit, burn-out, low pay and even mandatory Covid-19 vaccination rules, all contribute to the low take up of social care jobs in Britain.

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