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Social care funding reforms announced

Sep 7th, 2021

Kate Mawer, Solicitor

The Prime Minister has today (7th September 2021) announced the long-awaited proposals for the reform of social care funding. Whilst it is widely accepted that reform of the social care funding system is long overdue there is strong disagreement over the best way to fund the system.

The proposals in a nutshell

The Prime Minister’s proposal is to raise the rate of National Insurance and tax on dividends by 1.25% from April 2022 in order to raise billions of pounds to help the NHS recover from the huge backlog it is facing and also help fund social care. From April 2023 the increase in National Insurance will appear on wage slips separately as a health and social care levy. The levy unlike National Insurance will also apply to working pensioners.

The proposals also introduce a cap on the maximum amount of fees that an individual will be expected to pay towards their own personal care from October 2023. This cap is proposed to be set at £86,000. For anyone with assets of less than £20,000 the state will cover the costs of care. For individuals with assets between £20,000 and £100,000 the state will provide some assistance on a means tested basis.

There are some issues still to be clarified, but if the proposals are accepted this means that moving forward people will have some clarity and understanding as to what they can expect to pay towards their personal care.  This will help them to plan for the future and no doubt the financial services industry will respond to help people plan should they have to pay towards to their care.

Here are the full details of the government proposals for Health and Social care. 

Business as usual - a reminder of the current funding regime

Until/Unless these new proposals are accepted the current funding regime remains in place. The current system is based on a financial assessment of the individual’s income and capital. If an individual has assets over £23,500 then they will be required to self fund any social care that is required. Currently, there is no cap on the total amount that can be spent on care. Local Authority assistance is usually available for individual’s with assets below £23,500.

We are here to help

Planning for future care fees is a complex area and specialist advice is recommended. The Private Client Team at Langleys has extensive knowledge and experience of estate planning for individuals including the rules regarding the assessment for care home fees. We can help you plan for any potential future care needs and ensure that your affairs are structured in the most effective way.

If you or a family member would like to discuss your circumstances, please contact the Private Client Team.

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