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Tax rises to fund social care - whatever your view, ensure the starting position is understood properly first!

Having quickly skimmed the Government announcement on changes to National Insurance to fund social care (although for the next three years, this will be primarily allocated to funding the NHS), there and will be much to say. The devil will be in the detail as more emerges and I'll no doubt be sharing some views on that in the coming days and months.

However, any concept that making these changes will 'save the family home' for children to inherit, starts at the wrong place in understanding the present system of people meeting the costs of their care and fails to appreciate that a cap on care costs does not extend to any limitation on the accommodation costs or other costs linked to care provision which is not 'personal care'. An £86,000 care cap is NOT a cap on total expenditure on meeting the needs of someone requiring care, support and assistance.

The concept that 'the Government takes away people's houses to pay for care is also fundamentally wrong. There is a means assessment that takes the value of a person's assets (which includes the value of their house) and treats the value as being available to meet care costs, effectively by treating the value of all assets like cash in the bank. Bills for care costs apply where people's asset values exceed the financial threshold for state support. 

Those bills are presented for payment on a weekly or monthly basis. People will have their income from state and occupational pensions, attendance allowance and any other sources to contribute towards this cost. 

If, as is likely to be the case for the large majority of people, their income does not meet the costs of their care, capital is needed to be used to make up the shortfall.

Where a property is owned, it is the value of that property used in the assessment of available capital and treated as available cash in the bank. Unfortunately, however, you can't withdraw a property brick by brick. Accessing the value of a property is all or nothing - sale, taking out an equity loan or retention, perhaps using the Deferred Payment Scheme so that the property can be retained for now with a charge repayable after death.

I often find when I explain that the Government doesn't simply take away people's houses and that their income means the depletion of their capital is slowed somewhat against their costs, people are much more understanding and accepting of meeting their costs of care.

So whilst headlines around 'limiting' care costs may be attractive to some and incendiary to others at the moment, let's ensure that misinformation around what happens to meet the costs of care is minimised and accessible information is made available. Perhaps then we will all be in a better position to understand the implications and proposed changes arising as a result of the Government's announcement.

People will no longer pay more than £86,000 in care costs - that is, for actual care, rather than accommodation - over their lifetime, from October 2023 Once people have reached this cap, ongoing costs for personal care will be paid for by local authorities

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private legal services, tax and estate planning, care home fees, social care