Long-term Care - Golden Gate Financial Planning & Wealth Management

With increased life expectancy, it’s advisable, wherever possible, to factor potential care costs into any financial plans you have for the future.

Is government support available?

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:

Under £14,250: you will be entitled to local authority support. You won’t have to contribute from your capital, but you will be expected to contribute from income in excess of the personal expenses allowance (PEA) which is currently £25.65 per week in England and £28.01 in Northern Ireland.

Between £14,250 and £23,250: you will be entitled to some local authority support. You will have to contribute some capital (£1 per week for every £250 of capital between the lower and upper threshold), as well as income in excess of the PEA.

Over £23,250: you will be obliged to pay for the full cost of your care.

The capital limits differ in Scotland, as shown below:

Under £18,500: you will be entitled to the maximum level of local authority support. You won’t be expected to contribute from your capital, but you will be expected to use your income to help fund your costs.

Between £18,500 and £29,750: you will have to contribute £1 per week for every £250 of capital between the lower and upper threshold and you will be expected to use your income to help fund your costs.

Over £29,750: you will be obliged to pay for the full cost of your care. If you have under £29,750 in capital, but your income is considered sufficient to fund your care, you will also have to pay all of your fees.

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.

What does a means test include?

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:

Your spouse or civil partner still resides in the property

A disabled relative resides in the property

A relative aged 60 or over resides in the property

A child aged under 16 resides in the property

The person is in the first 12 weeks of requiring long-term care

Their care needs are only temporary

Will giving my property away exclude it from the means test?

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.

How much will long-term care cost?

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.

Proposed changes to the care system in England

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.

Planning for the cost of long-term care

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.

¹ONS

² LaingBuisson 2020