Savers aged 40+ could be forced to pay more tax to cover the cost of care in later life, under plans being considered by the government
Under the plans the over-40s would face higher taxes or national insurance or would be forced to insure themselves against costly care bills in later life.
As reported by the Guardian officials are looking into exactly how this system would work either via a payroll tax or insurance but any insurance model would have to be compulsory to ensure people paid.
The money raised via these methods would then be used to pay for the help elderly people need when trying to care for themselves at home, for example washing, dressing and other activities, or to cover their stay in a care home.
The plans are currently being looked at by the government’s health and social care taskforce and the Department of Health and Social Care.
According to the Guardian, the proposals are becoming the government’s preferred option to fulfil the prime minister’s promise to “fix the crisis in social care once and for all”, with health secretary Matt Hancock being a keen advocate of the plan.
But the Treasury is unsure about introducing the system as it risks angering people who still have mortgage or child rearing costs to meet.
According to one of the Guardian’s sources, the government is split on the idea.
In a speech last month (June 30), Boris Johnson said he would not wait to fix issues in the social care system that “every government has flunked for the last 30 years” and that the government was finalising plans.
The social care crisis has been rumbling on for years, with the publication of a green paper to address the issue originally expected in summer 2018 but subsequently dropped.
In December’s Queen's Speech the government announced it would provide an additional £1bn for councils in every year of this parliament, with the government pledging to consult on a 2 per cent precept that would enable councils to access a further £500m for adult social care for 2020-21.
But no further reform was mentioned in the March Budget.
Meanwhile the industry has come up with a number of suggestions including a Care Isa and Care pension but so far nothing seems to have been picked up by government.
Another suggestion from a think tank was to use the Covid-19 crisis to highlight issues in the sector and to push for the government to introduce tax measures to fund social care and allow it to be largely free at the point of use.
Last week (July 24), equity release adviser Key revealed over-55s are increasingly looking at property wealth to fund care, which Mr Johnson had promised should not need to happen.
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