ESTABLISHING A THOROUGH WEALTH STRATEGY IS KEY TO ENSURING FINANCIAL READINESS

The financial implications of care in later life are often underestimated, leaving many unprepared for the substantial costs associated with care homes. Establishing a thorough wealth strategy is key to ensuring financial readiness for long-term care needs.

In England, individuals with assets exceeding £23,250 are currently required to self-fund their care home expenses. However, a new government proposal aims to introduce an £86,000 lifetime cap on care fees starting from October 2025, designed to simplify care fees planning and potentially reduce the financial burden on individuals.

UNDERSTANDING THE £86,000 CAP ON CARE FEES

The proposed cap on care fees, often referred to as the ‘social care’ cap, intends to limit the personal financial contribution towards long-term care costs. At first glance, the cap appears to offer considerable relief; after an outlay of £86,000, further personal care costs would ostensibly be covered by one’s local authority.

Yet, it’s crucial to recognize that this cap exclusively pertains to personal care costs, leaving individuals responsible for additional expenses such as accommodation and living costs. Moreover, the intricacies of what expenditures count towards the cap mean that many may find themselves contributing significantly more than £86,000 for their care.

CHANGING LANDSCAPE OF SOCIAL CARE FUNDING

The government’s proposal extends beyond the care fees cap and includes adjustments to the capital thresholds associated with means-tested social care funding. .ey changes the government is proposing from October 2025 are introducing an £86,000 ‘cap’ on how much an individual has to spend on personal care costs over their lifetime and increasing the upper and lower capital thresholds for means-tested social care funding to £20,000 and £100,000.

At present, the social care upper limit is £23,250, and the lower limit is £14,250 in England. If your assets are above £23,250 and you don’t qualify for NHS support, you must pay full care fees. If your assets are below £14,250, then the local authority will pay for your care costs. Any income you do have will be used to pay part of your care fees.

///CONTINUE READING THIS BLOG ON PAGE 7 (CLICK HERE)///

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.