On Monday, 11th February 2013, the coalition announced that they will introduce a cap on the amount that elderly people are charged for their long term care needs; up to a maximum of £75,000.00. It was heralded as a policy that will help stop elderly people being forced to sell their homes in order to pay for their care needs in old age. However, this amount relates solely to the provision of care and specifically excludes what are termed residential (accommodation) and “hotel costs” (extras such as a visiting or onsite hairdresser for example).
Taking average figures in to account this means that by the time a resident has spent the headline figure of £75,000.00 on their care requirements they will have actually paid a total amount in the region of £140,000.00 for their combined costs.
This move was taken in the hope that it will enable people to more accurately quantify what their likely care costs in old age will be and allow them to plan and budget appropriately. The much mooted preference being for a form of insurance that will cover, at least in part, these costs.
In order to balance the books it was also announced that the threshold at which Inheritance Tax (“IHT”) becomes payable will be frozen at the current level of £325,000.00 until at least 2015 and more likely until as long as 2019. This measure will bring an additional 5,000 estates into the IHT net raising approx £1billion.
With an aging population and more and more of us requiring some form of social care after retirement it is increasingly important to take professional advice in the areas of wealth and care home fee planning.
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