In an exclusive report in the Guardian this weekend it was indicated that the government may be planning to introduce a tax increase for the over-40s across the United Kingdom, in order to provide a fund to pay for the care of those who require residential or nursing care towards the end of their lives. Apparently, the government have been looking at similar schemes which apply in Germany and Japan whereby citizens are charged a levy of 1.5% of their salary which is paid into a central pot to fund future care. An alternative could be some form of compulsory insurance for the over-40s.
There can be no doubt that the issue of funding social care in the UK is becoming more and more of a political and economic time bomb, particularly given our ageing population and the rising cost of care itself. At present, in Northern Ireland, if an individual requires residential or nursing care and has capital assets in excess of £23,250 then they will be responsible for the full cost of that care, with the result that in many cases people's life savings and children's inheritances are largely wiped out. Similar rules apply in the rest of the UK.
However, there is no doubt that this proposal is likely to be politically contentious in itself. The over-40s are all of course potential Tory voters and such proposals may not play well to them. In addition, a fully insurance-based system would leave those affected at the mercy of insurance companies when it comes to the cost of premiums. Another issue to be clarified is to what extent these changes will apply in Northern Ireland, as opposed to England and Wales, given that health and social care are devolved matters within the remit of the Northern Ireland Assembly. Clearly, any proposal to fund social care through the tax system would either have to be done on a UK-wide basis or result in further divergence of tax rules throughout the UK.
It is important to remember that these are currently only proposals and we have yet to see any detailed draft legislation. In the meantime, at Cleaver Fulton Rankin we have considerable experience in advising our clients in relation to the financial implications of nursing care and the most efficient ways of structuring their affairs so as to minimise the likely costs.
If you require further advice on these issues, please contact a member of the Private Client team.
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