Since 2009, local authority income from care home residents in England has increased by 18%.
In some areas people may be forced to sell their house to pay for care, but many councils operate a deferred payment scheme that allows people to keep their home during their lifetime. Since 2009 local authorities have placed legal charges on more than 15,000 properties, which is about eight a day.
From April 2016 some elements of care charges will be capped, potentially reducing the overall costs. Also, all local authorities in the UK will have to offer deferred payment schemes from 2016 so no-one should be forced to sell their home, but annual interest of around 4% is likely to eat into the family inheritance.
Sean McCann, chartered financial planner at NFU Mutual, said:
“None of us can know whether we’ll need care in later life or how much we’ll have to pay. Even the best financial plan won’t allow you to avoid some costs, but it can help increase how much you leave to your family.
“There is no one-size-fits-all approach, but there are steps that can be taken to protect your savings. There is some very straightforward planning that can help, especially around pensions and inheritance tax, although with the constant changes to the rules you need to keep your eye on the ball to make sure you don’t pay more tax than you have to.”
Research by NFU Mutual found that in contrast to care home costs, only around one in ten people aged between 45 and 64 (11%) are as concerned that inheritance tax or bankrolling children and grandchildren will affect their family’s wealth. Poor financial decisions, changes to the pensions and tax system and performance of investments are also factors they fear could impact future wealth.
