Potentially, another national insurance tax increase to pay for social care

[Toodaloo1567]

Just stumbled on this and wondered about everyone’s thoughts. Essentially, the government is being advised to increase national insurance to pay for elderly social care. I’m not keen. apple.news/AQkrJ_mvnRmClZjz_HJzA9w

As a point of reference, I know some older Americans who took the option to purchase high quality social care private insurance. If necessary the insurer, who has a good reputation, will cover the full costs of living in a certain network of private retirement homes with escalating medical care and memory units. There is a lower age limit, IIRC age 80.

The cost is either $1M pp or $1M per couple, I forget which. It is hardly for everyone.

PS It must be $1M per couple! The other does not make sense.

@Rictasmorticia I agree the first step is NI payable by anyone working. Of any age. This cannot all be lumped on younger working age people.

We also have a much bigger tax contribution from the 40.% plus payers already. People have bills to pay. There needs to be government backed ring fenced insurance. If everyone pays in something, the costs are reduced for all. Current care home fees are at least £1000 a week. Often more. DMs was £5,600 a month. We cannot keep dodging paying and we will have to either accept individuals pay or we collectively insure. At the moment many cannot move out of hospital due to care in the community being not available. There are no community hospitals to prepare for home living.

We also have to accept home equity might be used. It’s unearned income. The only sure way to avoid IHT is to spend the money!

It's nowhere near 1 in 5, where have you found that stat? It's between 2 and 3% of the over 65 population depending on region (cite: the ONS, 2021). Obviously it's higher the older and more frail you become, circa 15% of those over 85, but that obviously doesn't include the (sadly) many people who die before then. Most older people will live, age and die in their own homes.

Additionally, older people already make up the highest proportion of those self funding their care. Though the activity levels are higher (by far) for older people, the cost of providing care and support for disabled children and adults under 65 is the most expensive per capita.

Radical reform is required and a recognition that a properly funded state social care system is all of our business and responsibility. This all smacks of 'why should I have to pay for them'.

The social contract hasn't just been broken, it's been destroyed.

@fiftiesmum I do too

Well the Gov should face down the right wing press.
IMO its the most sensible option by far. It takes money from the dead who don't need it, prevents people losing all of their precious inheritance. and funds care without further burdening the working population.

I would be happy to pay more

The of care at home is huge, it's not just care homes so selling your home doesn't make any difference

PS I think the lower age limit for the insurance I mentioned above must have been 70 not 80. Otherwise I cannot see how anyone would buy it. But yes the cost was prohibitive for most. Even though British prices tend to be lower, I cannot see how this would work.

Love the idea of Ken Dodd’s death tax.

A death tax or inheritance tax. I don’t see why not 50% of everything over 100k , 80% over 1 million or whatever is palatable.
If you are dead, being rich doesn’t help you much.

@HellsBalls yes I think that would not be a bad idea too so long as any loopholes were identified early - maybe 40% of anything over£100k and 50% of anything over 500k - but 50% of all net receipts totally ringfenced for social care - be that care at home or residential - would also then set some legislation relating to care homes and fees and rises etc and social care providers too- because the minute they think the state will cover it you can guarantee they will up the fees etc- a bit like US health and insurance providers.

They could just keep inheritance tax as it is, although agreed, it should be more, but the howling from the riches 5% of society who pay it would be deafening if it was increased. This 5% (or whatever the numbers added up to) would be a social care tax, payable by everyone who died over retirement age regardless of whether they used care or not. Care would then be free although I do think a weekly charge should still be made by care homes for food and accommodation because they would be feeding and housing residents. This would be small though and not more that a state pension.

Right wing press, and every single political party who didn't this of it first would hate it though (they'd probably like it if it was their idea).

Oh, and bring back council run care homes.

@Kendodd What a twist on politics! It was Teresa May, a Tory, who was slammed by nearly everyone for her “dementia tax”. Including the Mirror. Labour also produced a Death Tax plan and we also had the Independent Dilnot report. Nothing has changed and reform is always opposed. By more or less everyone.

Council run care homes were not great. There are far better ways of running care homes. Some council ones were dire. No thanks.

It’s not really about who runs them. It’s more about meeting the needs of the elderly. Most of whom want to stay at home. We have far too many people not working and paying tax but we also have people caring for relatives for close to nothing.

We should also bring back convalescent hospitals so the elderly who aren't actually "ill" but who need care can be discharged from hospital and put into a kind of "drop down" ward where they get care, but not medical attention. Yes I know they were horrid places when they started to get closed in the 70s and 80s with the "care in the community" initiative, but again, rather than throwing the baby out with the bathwater, we'd have been better just building "better" convalescent homes to more modern standards rather than just scrapping them.

Care in the community costs an absolute fortune, having to have carers, district nurses, doctors, etc., all spending time and transport costs driving randomly around sometimes large areas between people's individual homes rather than having patients in one place where more time could be spent looking after them rather than on the road.

It’s not just care homes but many more have care in the home, house value is not included in the financial assessment for that.

We have far too many people not working

Because we have shifting demographics so it’s no longer a pyramid, that’s the issue.

There's a lot of working people who don't have homes to sell which is the problem ....

What a shocker..I have nothing left to give zero, zip, nadda…

They could just keep inheritance tax as it is, although agreed, it should be more, but the howling from the riches 5% of society who pay it would be deafening if it was increased.

Of course, the very richest (no idea of the percentage) don't pay their full whack as they can use trusts etc to escape it.
If the labour government manages to break whatever trust law currently causes pension funds to be inherited tax free (and I agree they should) I wonder if they can move on to getting the super wealthy to cough up a fair proportion?

Meanwhile, a small tax on everyone's residual estate doesn't seem like too preposterous an idea given we do already have a 'death tax' for some.

Trouble is it's not a "small" tax. A flat rate of 40% goes against all economic/behavioural ideologies. When you're faced with a huge leap from 0% to 40%, you're going to take action to avoid the 40% portion. It's simply human behaviour - the "tipping point". You're going to look at your estate and do "something" to remove the portion over the threshold.

Fair better would be to have a lower rate starting at a lower amount, instead of 40% from £325k, make it 20% from £250k and then 40% from say £1million, if you only want two rates. Or even better have a starting rate of 10% and then 20, 30, 40 bandings.

For it to work, it needs more people paying it, more people being brought into IHT. As it stands, so few pay anything anyway, and they are highly incentivised to take tax planning actions to avoid it completely.

Since Rachel's budget, I've had numerous clients suddenly showing interest in IHT, mostly because of her bringing pension pots into IHT. Some of those had chargeable estates slightly over the threshold, but previous projections of IHT had shown pretty small IHT liabilities, typically £10-£25k or so, where the costs of setting up trusts or transferring assets to children etc., would have cost a few thousand, so really wasn't worth it - i.e. not breaching the "tipping point". Now some of those same people are facing IHT of £50k - £250k because of pension pots of £500k-£1m, and they're now queuing up to set up trusts and transfer assets asap to reduce their estates to get the IHT back down, but not down to £10-£25k, they're aiming to zeroise IHT! So, by trying to get more IHT, Rachel could end up getting less because it's just encouraging more people to undertake IHT planning actions!

I meant adding a small tax (so, a bit of banding) not that 40% is small, @Badbadbunny !

So, people "purchase" an insurance product, that pays out minimum 1k a week. You're not very business minded, that isn't a profitable business model.

How much do you think this would cost per individual ? And how do the generations of unemployed never worked a day in their life pay for this insurance? 🤔 hint. they don't.

I wouldn’t. The majority of people don’t need social care and I’d rather take the chance personally. If one or both of us need care our savings and ultimately our house will have to pay for it. Insurance would just mean insuring the kids’ inheritance.