If you’re covering the Conservative Party’s plans to tackle the social care crisis, please see the following comment from Rachael Griffin, tax and financial planning expert at Old Mutual Wealth:
“Social Care funding is one of the starkest issues and has the ability to be a game-changer in this election. In their Manifesto the Conservatives had the opportunity to outline a clear and sustainable plan to tackle the crisis. Instead they have created a measure, which fails to tackle one of the major problems and worse still it is inconsistent with other new policies.
“One of the sticking points with care costs is the swift rate at which they can escalate, leaving elderly people without a sense of control as they funnel substantial parts of their estate into a bottomless pit of care costs. The government have created a funding floor, meaning people will have to spend the majority of their wealth to fund care but it will stop at a certain point. What is really needed is a funding ceiling, where people only spend up to a certain amount.
“With multifaceted issues several policies are needed. The government could have also considered using pension pots and allowed people to channel their funds to care providers or into products such as care annuities tax free.
“The new policy also clashes with the Residence Nil Rate Band (RNRB), which came in earlier this year. The basic principle of the RNRB is that a family home can be passed on to direct descendants free of inheritance tax. The allowance came after the policymakers recognised IHT bills were surging as property prices went through the roof and many beneficiaries who wanted to keep the family home faced either getting a mortgage or selling. In effect this social care policy will replace that IHT bill with a care bill and mean beneficiaries will again have to consider either getting a mortgage or selling.”