My solution for care funding

[Kendodd]

It seems unfair to me that the cost of this are to be loaded on the young. I'm old btw

My solution, that I believe to be fairest would be a 2% inheritance tax that everyone who dies over retirement age pays. This is separate to the inheritance tax we already pay and could be owed against a house while a spouse remains living in it. Care is funded from this with residents of care homes only paying a food bill. The 2% is paid whether you needed care or not.

If you don't like my solution, please suggest a better one, don't just criticise.

Overhaul inheritance entirely. You could leave a small amount of cash to your immediate relatives and one or two other people - say £20k max - and everything else goes to the state. It'd be a great social equaliser.

It's only 3.7% due to size of estates and careful will planning. IHT is the easiest tax to avoid with pretty simple planning.

How would your 2% tax work? Would there still be the same exemptions as we have now? If not, how would it work, when you suddenly have people with modest estates suddenly having to prepare and submit IHT returns - HMRC wouldn't be able to cope with 100% of deaths resulting in IHT returns needing submitting, checking, tax collecting, etc!

No it wouldn't. People would either spend the money or pass it to their beneficiaries whilst they were alive. No one would be stupid enough to die with assets/money in their estate if they knew it was all going to be forfeit to the Treasury!

@Kazzyhoward I think CGT should be much higher.

As usual the ones who spend everything they get in the here and now and never save won't leave an estate but presumably will just get given care. That is not fair. Better for people to pay insurance for their old age. This would depend on health of course so if you keep yourself got and we'll would be lower. Might also insecticide some to look after themselves better when younger.

You mean kill off anyone who can’t afford decent care in their later years? You do know that the retirement age is now 68, so you’d expect anyone below this age BY 8 Years, to be killed off?

Unfortunately, we've come too far in terms of being a "nanny" state for everyone to take care of themselves, health wise nor money wise.

Take pensions. Even if you've never paid a penny in NIC, you'll still get a basic level of income upon retirement in the form of pension credits. Ironically, these are reduced if you have a small private pension, so unless you are going to save in pensions to a pretty high level, to get a decent income in retirement, it's not worth saving at all. Pointless saving to get a £50 per week private pension if your pension credit is reduced by £50 because of it - you're no better off!

Rent a house all your life instead of buying. That's fine, when you hit state pension age and all your income is just state pension, the state will pay your rent for the rest of your life.

For as long as there are "safety nets", which any decent society should have, there'll be people gaming the system to their benefit.

We need to find ways of incentivising people to make their own provisions and not relying on the state. I.e. if you pay for private medical treatment, there should be some kind of state contribution to reflect the saving to the NHS. If you send your kids to a private school, likewise a state contribution to reflect the state not having to pay for a state school place. We already have it with pensions where there is tax relief on contributions. We now have it on a smaller scale with "save to buy a house" ISAs. Why not have something similar for care homes and home care - i.e. make your own provision (perhaps via an insurance policy) and the state chips in a contribution to reflect the amount that will be saved by the state in not having to pay in decades to come.

Spending it would be fine, but any "gifts" made in the last seven years would be subject to 100% tax.

How are you going to police it?

Easy to get around. The person could buy something for their beneficiary instead of giving them money. I.e. a new flat screen TV for Christmas. Paying for a family holiday. Buying artwork for a birthday present. No trace if they give cash instead of pay by bank transfer, etc etc. Over several years, huge amounts of money can be "gifted" to the next generation without being formally identifiable as gifts subject to IHT. Anyway, the HMRC don't have the resources to obtain and scrutinise everyone's bank statements to trace lump sums - they can't spend hours/days poring through every individual's bank statements in the hope of catching the 1 in 50 who hasn't declared a gift subject to IHT!

What do you mean “the cost of this to be loaded on the young”? The cost of elder care in care homes has been paid by the young (working age) since the 1948 National Assistance Act (although Home Care had been around & paid for since 1929).

So those that are elderly today, paid when they were young for the elderly then. It’s simply the turn of todays young to pay for the elderly now. It’s something you pay forward. It’s not really fair that todays old should pay twice!

That said elder care is underfunded but a 2% inheritance tax on anyone over 67 dying wouldn’t close the gap. It’s not nearly enough money.

Yes there are enough young. The Millennials are a bigger generation than the Baby Boomers.

Kazzyhoward I'll get my minions to work out the details.

2% is very far from enough unfortunately.

My MIL has been in a care home for 8 years in London.

So 50k x 8 is £400k.

This is hugely more than 2% of her estate would be worth. An estate of £20 million would be needed (if I have that right?)

@Discovereads lol millennials aren't young. there are more over 65s to u15s.

"The number of people aged over 64 has surged by 20% over the past decade in England and Wales, to 11.1 million people."

If you don't understand the economic impact of that then...

Lol, Millenials are all working age though aren’t they? It’s 16-66yr olds that fund the care of the over 67s (retirement age isn’t 65 anymore). It’s not the ‘under 15s’ who fund it so that’s a bit irrelevant. Plus with a net immigration of 300k working age people per year, that helps massively augment the low birth rate/low numbers of children.

The last Baby Boomer will be dead long before the first Millennial goes into a care home. So the ratio of working age supporting elderly in care homes is not at all unbalanced.

Millennials are aged 26-35. Sorry but that’s definitely still on the young side of the 16-66 working age spectrum.

It’s not the ‘under 15s’ who fund it so that’s a bit irrelevant

Of course it's relevant! Who will be supporting those retiring in the next 10 years plus?

Plus with a net immigration of 300k working age people per year, that helps massively augment the low birth rate/low numbers of children

No it doesn't hence why we need more immigration.

Look at the state of social care & health care now, and the tightness of the job market. And don't forget the increase in economically inactive people over 50.

We needed to be planning for it yesterday.

It's about the workers of tmw, not today!

You also need a ratio of more than 1 worker to 1 pensioner.

There’s no doubt social care & NHS are underfunded, but thats not because of demographics. We don’t actually need more immigration- it’s only one of many ways to boost government tax revenues to then fund social care & the NHS.

If you are sitting on £500k plus you should pay yourself. The small levy on those working makes sense for the future only if it means we are guaranteed care

There are huge economic challenges with the shift in demographics we & other countries are facing, it's unprecedented

inews.co.uk/opinion/englands-population-is-ageing-our-deeply-substandard-politicians-ignore-what-this-is-going-to-cost-us-1720418

amp.theguardian.com/society/2022/jul/02/ageing-england-wales-those-65-or-over-outnumber-children-under-15

We don’t actually need more immigration- it’s only one of many ways to boost government tax revenues to then fund social care & the NHS

What realistic alternatives do you suggest?

Yes, I’m quite aware. Look at these projections on ratio of workers to old age dependency starting with actual data in 2018-2020 and projecting out to 2043.

In all regions of England and London, the ratio of workers to old age dependents will increase, meaning more workers will be supporting fewer old age pensioners in 2043 than there are now.

www.ons.gov.uk/file?uri=/peoplepopulationandcommunity/populationandmigration/populationprojections/datasets/populationofstatepensionageandworkingageandoldagedependencyratiosforlocalauthoritiesandregionsinengland/2018based/2018snppprincipaloadr.xlsx

And also, if you look at the demographics chart for the U.K., it is balanced:

www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/howwouldyousupportourageingpopulation/2019-06-24

the projections Ive read say otherwise. In 20 years there will be more pensioners per working age. I'm sure state pension age will go up to 70. Although why they are increasing it when there is no issue I'm not sure.

And also, if you look at the demographics chart for the U.K., it is balanced:

I disagree that it's balanced, we are all going to need to pay more tax & not just out of income. There will also be more young people who look for opportunity abroad as why work to pay high tax & a 50 yr mortgage.