It’s a well-known fact that the UK population is getting older. According to ONS data1, all regions of the UK are projected to have a greater proportion of people aged 65 years and over by mid-2028. In England as a whole, this is projected to have increased from 18.2% to 20.7% of the total population between mid-2018 and mid-2028.
With increased life expectancy, it’s advisable, wherever possible, to factor potential care costs into any financial plans you have for the future.
The support you may be entitled to varies across the UK.
In England and Northern Ireland, any funding is currently based on the following capital limits:
The capital limits differ in Scotland, as shown below:
If you live in Wales, a capital limit of £24,000 applies to non-residential care, and a limit of £50,000 applies if you need to have residential care.
When a local authority performs a means test, most of your assets and savings are treated as capital but your home is normally excluded under the following circumstances:
The local authority is entitled to question whether or not you have transferred your property specifically to avoid it being included in the means test. There is no time limit for this.
The cost of staying in a care home depends on where you live and the type of care you need. In 2020, the average cost of a residential care home in the UK was almost £35,000 a year, rising to over £48,000 when nursing care was included2. Costs can be even higher for full-time care at home, so it may make financial sense to move into a care home.
These costs may not be all-inclusive – day trips, entertainment and other services may cost extra, so be sure to check with the care home exactly what’s included in their fee.
For those considering at-home care, this could cost between £20 to £30 per hour (meaning that two hours of care a day at £25 an hour could cost around £16,800 per year).
However, you may be entitled to support from your local authority to help you with these costs.
In September 2021, the Government set out plans to reform adult social care in England, to be funded through the Health and Social Care Levy.
The Government plans to introduce a new £86,000 cap, from October 2023, on the amount anyone in England will have to spend on their personal care over their lifetime. The cap will apply irrespective of a person’s age or income. Any money paid by a local authority towards meeting a person’s eligible care needs will not count towards the cap.
In addition, the means test for accessing local authority funding support is set to become more generous from October 2023, with the upper capital limit increasing from £23,250 to £100,000 and the lower capital limit increasing from £14,250 to £20,000.
Our advisers can assist you in planning for the potential expense of long-term care, tailoring our advice to your individual circumstances.
We can advise on the various funding solutions available to you, from purchasing an annuity (lifetime income) or raising capital through equity release, to invest in products that can pay an income to fund your care. You could use one of these options, or a combination of all three.
If you’re facing the prospect of paying for your, or a loved one’s, care, then let us help you make the best choices. Just get in touch.
The value of investments may fall as well as rise. You may get back less than you originally invested.
Think carefully before securing other debts against your home. Equity released from your home will be secured against it. To understand the features and risks, ask for a personalised illustration.
2 LaingBuisson 2020