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This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

UK’s over-40s may have to pay extra tax to cover old age care

employees

All employees aged 40 and over would pay around 2.5 percent of their wages to fund their care in old age

Under plans being looked at by the Prime Minister, all UK employees aged 40 and over would pay a fixed levy of around 2.5 percent of their wages.

The reform of the social care system – which currently sees pensioners forced to sell their homes to pay bills of around £750 a week – would be based on the German system.

Health Secretary Matt Hancock said: We need action now, finally, to seek a solution that can support future generations.

This would involve the over-40s paying into a pot, which would be handed out in cash payments to the elderly and disabled receiving care.

It would not eliminate the possibility of people having to sell their homes to pay for residential care. But it could reduce the chances of this by allowing elderly people to pay family members and carers to look after them in their own homes instead.

Critics say the levy may have to rise to between 4.5 and 6.5 percent over the next 30 years to meet the rising costs of an ageing population.

Under the existing system in England, only people who have less than £23,250 in savings – and are deemed to require considerable help – qualify for council-funded care.

This figure has stayed the same since 2010.

For those looking to move into a care home, the value of their house is taken into account when calculating how much help they can get.

Other people rely on the free labour of family and friends, with an estimated 6.5 million unpaid carers in the UK.

Mr Hancock, who has said he is “attracted” to the 2.5 percent levy, wrote to all MPs and peers last week asking for an all-party agreement to resolve the social care scandal.

In real terms, funding has been reduced by £700million a year since 2010, according to health think tank The King’s Fund.

Shadow social care minister Barbara Keeley said: The process outlined by Matt Hancock is another consultation that provides no help to a system in crisis.

Labour wants to see all pensioners offered non-means tested personal care. This is already in place in Scotland, which makes some help with washing, dressing, meals and medicines available to everyone for free.

The cost of that plan for England would be an estimated £7.9billion a year by 2030/2031.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.