LETTING & ESTATE AGENT

We are pleased to announce that following the government’s guidance on moving home during the coronavirus pandemic, our branches in England have now re-opened for pre-booked appointments, and our branches in Scotland in Wales will start re-opening their doors over the coming days. Health and safety remains our main priority, and in line with government’s advice, a number of strict measures have been put in place to protect our staff and customers. Visit our branch page to find contact details for your local office.

Get Your Care Fees Paid Tax Free to the Nursing Home

Get Your Care Fees Paid Tax Free to the Nursing Home
Funding for care fees is an expensive business.  A large percentage of the elderly will at some stage consider having care provided at home, others by care homes.  The burden of arranging care and often paying the fees usually falls on their children or close relatives, many of them in their 60’s and considering retirement themselves. But don’t worry - there is a way that life can carry on as normal with a little sensible planning.


Funding for care fees often means that family members will not inherit, and if they do, their inheritances will be decimated by care fees funding.  Some 40,000 houses are dispossessed each year by local authorities to pay for care fees where the local authorities have paid the fees, and the last occupant of the family home has passed on.


Costs of Care


Care fees now cost in the range of £800 to £1,000 per week, and the care fees inflation rises at between 5% and 8% per annum.


Financial Assessment


Individuals undergo financial assessment and their income and capital assets are means tested. If their capital assets (above excluded assets, which include the house if certain relatives, such as a spouse, live there) are above the upper threshold then no Local Authority assistance is available, and you get reduced assistance down to the lower threshold limit.  Below the lower threshold, full assistance is given but individual top ups may be required. Threshold limits vary:

 

England/ N. Ireland            Upper  £23,250       Lower  £14,250
Scotland                                      £22,750                  £14000
Wales                                          £22,000                  £22,000


(Source: www.direct.gov.uk/en/CaringForSomeone/CareHomes/DG_10031525).


Paying the Fees


Many will have capital assets in excess of these limits, and will have to pay for care home fees to ensure decent accommodation and care.  If pensions and investments make up some income (which will mostly be taxable), then the balance of care fees must be found. 


The most tax efficient investment that also provides for escalating income and some capital protection on death (if required), is the Immediate Needs Care Annuity.  If payments are made directly by the provider to the care home, then these payments are tax free. Moreover, the Plan is portable and can move from home to home.  If you move back to your house, some tax will be payable.

 

Example


87 year old pensioner funding £10,800 per annum escalating at 8% for life.  Capital invested £55,800.


Immediate Needs Annuity Income   


Capital Amount £55,800 paying £10,800, escalating at 8%  p.a.  


Year   Income    Annual        Total

                          Increase     Income       

  1       10,800        864           10,800  
  2       11,664        933           22,464  
  3       12,597       1,007         35,061  
  4       13,604       1,088         48,665  
  5       14,693       1,175         63,358  


Practical Tip


To ensure increasing care fees are payable tax free for life, compare an immediate needs care annuity (tax free return 19.35% in first year in above example) to returns from existing investments.  Obtain peace of mind through ‘ring-fencing’ assets and not losing them to care home fees.


By Tony Granger