Social Protection Reform: Fears Rise in Response to New Ceiling – But How Can You Cut Costs? | Personal Finances | Finance

Social care is rarely free and the amount you pay depends on the level of care you need and the assets you have. In 2019, Boris Johnson pledged to ensure that no one was forced to sell their home to pay for care later in life. But now, two years and a global pandemic later, there are fears that some may still be forced to lose their homes in this way. Express.co.uk speaks with a tax, trust and estate lawyer about the main techniques you and the government can use to reduce social care costs.

Heading into the 2019 general election, which saw the Conservative Party walk away with a huge majority, Mr Johnson pledged to reform welfare.

He promised that “no one in need of care should be forced to sell their house to pay for it”.

However, following a new social protection proposal, the Prime Minister faces accusations that he has flip-flopped on this pledge.

Boris Johnson has announced a new social protection ceiling that will take effect from October 2023.

The cap, which is part of a larger package of welfare reform plans, is designed to address the fact that some people end up losing their homes and savings to the costs of care.

Under the current system, one in 10 people aged 65 in England incur social care costs of £ 100,000 or more in their lifetime,

However, from 2023 the government has proposed to reduce this to ensure that the maximum anyone can spend on care is £ 86,000.

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Critics of the reform, including the opposition MP and backbench Tories, claim the PM has broken his promises and claim the program will have a disproportionate impact on the UK’s poorest retirees. United.

However, breaking the 2019 manifesto promise was inevitable, according to Stewart Stretton-Hill, a tax, trust and estate lawyer at Irwin Mitchell.

Mr Stretton-Hill told Express.co.uk: ‘Breaking the party manifesto that they would not raise taxes was, in a way, inevitable in light of the Covid crisis over the past two years , but the money had to come from somewhere.

“Raising taxes to support the system will help, but it might just kick the box up.”

But the news need not be daunting for everyone, with Mr Stretton-Hill suggesting there is a simple way for the government to help avoid the harshest impact of this welfare reform.

Mr Stretton-Hill told Express.co.uk: ‘Encouraging individuals to save at an early age by offering tax incentives, similar to retirement savings, could help ease the burden on public funds, allowing funds to be directed to those with limited assets. .

“The wealthiest people could create a tax-free kitty to help pay for their care or, if not necessary, to provide a tax-efficient inheritance.

“Continuing to introduce a phased system in which the care ceiling is based on a percentage of assets as opposed to a fixed amount would be more equitable. “

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But the news need not be daunting for everyone, with Mr Stretton-Hill suggesting there is a simple way for the government to help avoid the harshest impact of this welfare reform.

Mr Stretton-Hill told Express.co.uk: ‘Encouraging individuals to save at an early age by offering tax incentives, similar to retirement savings, could help ease the burden on public funds, allowing funds to be directed to those with limited assets. .

“The wealthiest people could create a tax-free kitty to help pay for their care or, if not necessary, to provide a tax-efficient inheritance.

“Continuing to introduce a phased system in which the care ceiling is based on a percentage of assets as opposed to a fixed amount would be more equitable. “

Helping to train and support caregivers is another key element in reducing the financial cost of the crisis.

Supporting these key people whose work is “as important as our emergency services” should be a priority, said Stretton-Hill.

The government has offered a £ 500million fund to help train and support caregivers to ensure these people get the education and incentives they need.

In addition, helping seniors realize the capital value of their homes is a key way to tackle the costs of social care, Stretton-Hill said.

He added: “Facilitating downsizing by introducing, for example, a land tax relief on stamp duties would free up excess sales proceeds to help pay for care and bring more goods to market for them. younger generations looking to move up the ranks – in turn, potentially freeing up goods for first-time buyers.

But there are still problems with Mr Johnson’s proposal.

A fixed figure for the care cap will always lead to inequality when looking at the percentage of wealth an individual has to spend.

Right now there is a ‘cliff edge’ at £ 23,250, according to the tax expert.

If someone has assets above this threshold, they receive no help from the local authority.

The increase in the capital cap from £ 23,250 to £ 100,000, as well as the cap on childcare costs, will mean that many more people will be eligible for financial support from local authorities.

Many people claim this change will result in a postcode lottery, but Mr Stretton-Hill says a postcode lottery has been in place for many years already.

But he added that the new reform proposals risked creating a North / South divide due to the comparative value of properties.

Instead, he said a more appropriate solution would be to look at the percentage of an individual’s capital wealth spent on care.

Mr Stretton-Hill told Express.co.uk: “This way no one should be disproportionately affected by their ultimate care costs.”

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