June 8th 2017 has now come and gone and we are all now recovering in the aftermath of the latest general election. During the build up to this election, there were a large number of policies from all parties that attracted attention, but maybe one that attracted quite a lot was the Conservative Party’s policy which was dubbed the ‘dementia tax’.
Here we look at what was the policy in place before this election, the party’s proposed changes and where we stand today.
The reason why this tax caused so much controversy is because dementia is currently one of the leading causes of death in the UK and it is estimated that by 2040 a staggering 219,000 people will die from Dementia alone in England and Wales. Therefore changing the way that families of dementia sufferers are taxed and charged for the care they receive in these difficult times would only naturally cause a national uproar.
At present, for those individuals who are in care, the local council will pay for all or part of that person’s social care if they have less than £23,250 in capital in total. This includes those individuals who are in residential care as well as nursing homes.
This meant that those individuals receiving care who owned assets of value more than £23,250 would need to pay for their residential care themselves (although it was possible to have the treatment paid for out of their estate after they passes away to release the burden on themselves and their loved ones during their last days).
Controversial social care policies
The controversial measures that were proposed by the Conservative party included increasing the threshold up to £100,000 (which would be seem as good by most), and also to include the so-called domiciliary care (i.e. care at home).
The reason why this was so controversial is because the manifesto proposed to include the value of anyone’s house, even if they still lived in it and received home care.
This was seen as significant because individual’s homes were now at risk of being sold in order to fund the council’s costs of any dementia / home care provided.
As you can see, the proposed changes from the Conservative party was due to hit hard and affect many individuals in the UK.
Of those individuals who are in their 70s, it was estimated that between 12% - 17% would be affected by these new proposed rules which would mean a significant impact on their final estate once they passed away, which could ultimately have a negative knock-on effect to their future generations.
An ageing population
With the UK having an ageing demographic, and with longer life expectancy, it is no wonder that so many people are getting worried about the proposed increases in costs/tax for the elderly.
It will be interesting to see what happens to the ‘dementia tax’ proposals over the coming weeks whilst a new government is formed.
If you would like to find out more about the above changes and any other tax related issues, then please do not hesitate to contact one of our specialist tax advisers on 020 8429 9245 or email [email protected]