“Health and social care levy” introduced to address funding crisis
Prime Minster Boris Johnson has introduced a “health and social care levy” to ringfence taxpayer funding for the NHS and social care.
Mr Johnson was anticipated to break the manifesto promise of no increases to income tax, VAT or National Insurance as he leads efforts to address the shortfall in funding for key services, acknowledging in Parliament today that “this breaks a manifesto commitment, which is not something I do lightly, but a global pandemic was in no-one’s manifesto”.
The levy, which will be introduced in stages, and according to the PM will raise £36bn for frontline services over the next three years in the “biggest catch-up programme in the NHS’s history.”
The tax will begin as a 1.25% rise in National Insurance from April 2022 and the tax on share dividends will also go up by 1.25%. From 2023 it will become a separate tax on earned income appearing on payslips as “Health and Social Care Levy,” compared to the similar ability councils have to raise extra money through an “adult social care precept” since 2015. The anticipated inclusion of those working above state pension age has also been confirmed.
When it comes to social care the current set up sees anyone in England with assets over £23,250 pay for their care in full. In 2011, the
independent Dilnot Commission estimated that around one in ten adults aged 65 face lifetime costs of more than £100,000. 10 years later that estimate is now one in seven.
In “Build Back Better: Our plan for health and social care” the government reveal its intention to
“invest £5.4 billion in adult social care over the next three years to deliver… funding and system reform commitments.
To begin this transformation in adult social care, the Government will:
introduce a cap on personal care costs;
b. provide financial assistance to those without substantial assets;
c. deliver wider support for the social care system, particularly our brilliant social care staff; and
d. improve the integration of health and social care systems.”
Going forward from October 2023 a cap of £86,000 across a person’s lifetime will be introduced to reduce the risk of “unpredictable or unlimited care costs.” Anyone with less than £20,000 of assets will get free care and people with less than £100,000 of assets will see their care costs subsidised, 4 times the current limit of £23,250.
If total assets are above £100,000 then care fees must be paid in full to the £86,000 cap.
In reality though, how many people have a property worth less than £100k?
Especially in the South-east of England.
As a result, this will mean that unless you have £86k sitting around unprotected you will still be forced to sell your property to pay for your care either after 12 weeks of being in care or by your executors when you die to pay for the care fees that you have racked up.
This new bill therefore does not stop your home being used, it just puts a cap on the amount that can be taken.
Similarly, if you are paying for a nice care home for yourself or your parents, beware, that when your funds go below £20k or you have reached the £86k cap as the amount you will get in LA funding may be woefully short of what you need to stay in the home you are in, forcing many people to have to move to a cheaper facility, causing even more grief, anguish and upheaval.
And why pay £86k In the first place?
Sensible estate planning means you can avoid all of this future nightmare by simply putting your property into Trust at a time when you could not know that care was going to be a consideration and crucially for reasons beyond avoiding care fees such as ensuring your property does not go through probate and ensuring that should you die and your partner remarry that the new spouse cannot inherit your property, combined with ensuring if your children divorced after inheriting that they could not lose half of their inheritance.
Talk to us today about our property Trusts the fees for which are just £2195 including v.a.t and all Land Registry and solicitor fees.