• The government has recently introduced a new system to cover care fees.  This system will see a health and social care tax introduced across the UK, to pay for reforms to the care sector and NHS funding in England.

    The Prime Minister says this will raise £36bn for frontline services over the next three years – the “biggest catch-up programme in the NHS’s history”.

    What does the new health and social care tax mean for individuals and how does this compare to the current system?

    How are care fees covered under the existing system?

    Currently, individuals with capital assets over £23,250 pay for their own care on a self-fund basis.  If you own assets under £14,250 then the local authority pay for your care entirely. For individuals who own assets between £14,250 and £23,250 their care costs are made up of a contribution by both parties, the individual and the local authority. Individuals pay contribute towards their care from their income, if assets held below £23,250 apart from £24.90 per week for personal expenses.  The diagram below sets out, in a clear format this structure: –

    • Assets under £14,250
    • Assets over £23,250
    • Assets between £14,250 & £23,250

    The new system and health and social care tax

    The new health and social care tax will begin as a 1.25% rise in National Insurance from April 2022 and a tax on share dividends will also go up by 1.25%. It will then become a separate tax on earned income from 2023.

    The government have increased the figures above so that you only pay for the cost of your care if you have assets above £100,000.  This replaces the old figure of £23,250.  If you have assets below £20,000, then the local authority pay for your care. This replaces the old figure of £14,250.  Those with between £20,000 and £100,000 in assets will get means-tested help towards costs from their local council

    There is also a new cap on the amount of money you pay over your lifetime, towards your care. This is capped at £86,000 per individual.  Once an individual has paid £86,000, the government takes over payment of your care costs.

    Sounds too good to be true? There are a few caveats.

    The small print

    • The lifetime cap of £86,000 is only applicable on care homes that they government or local authority are willing to cover, for example, not a more expensive care home just because it is more convenient.
    • If the individual can receive care at home, the cap of £86,000 is only applicable to cover the hours that the local authority deem necessary
    • The cap of £86,000 does not cover living expenses such as meals etc.  it only relates to the true cost of care.
    • The allowance of £24.90 still remains, for personal expenses.
    • We have to wait until 2023 for this to kick in.
    • It only starts from 2023 and does not cover existing situations and funds already spent.

    Further support

    If you want to find out more about how this new system could affect you, please contact Brachers Elderly and Vulnerable team. We offer an initial free phone consultation to understand your requirements, and will be only too happy to help.

    This content is correct at time of publication

    Can we help?

    Take a look at our Court of Protection page for useful information, resources, guidance, details of our team and how we may be able to help you