Over 40's to pay more tax in the UK?

Eliza

Well-known member

Over-40s in UK to pay more tax under plans to fix social care crisis
Exclusive: Matt Hancock is advocate of plan to raise tax to cover cost of care in later lif

Everyone over 40 would start contributing towards the cost of care in later life under radical plans being studied by ministers to finally end the crisis in social care, the Guardian can reveal.

Under the plan over-40s would have to pay more in tax or national insurance, or be compelled to insure themselves against hefty bills for care when they are older. The money raised would then be used to pay for the help that frail elderly people need with washing, dressing and other activities if still at home, or to cover their stay in a care home.

The plans are being examined by Boris Johnson’s new health and social care taskforce and the Department of Health and Social Care (DHSC). They are gaining support as the government’s answer to the politically perilous question of who should pay for social care.

Sources say the principle of over-40s meeting the cost of a reformed system of care for the ageing population is emerging as the government’s preferred option for fulfilling the prime minister’s pledge just over a year ago to “fix the crisis in social care once and for all”. Social care is a devolved matter but the plans could apply to the whole of the UK as they may involve the tax system.

Matt Hancock, the health and social care secretary, is a keen advocate of the plan. He has been championing it in discussions that have resumed recently about the government’s proposals to overhaul social care. Officials say there is a “renewed urgency” in Downing Street and the DHSC to come up with a solution.

The system that officials are considering is a modified version of how Japan and Germany fund social care. Both are widely admired for having created a sustainable way of financing social care to deal with the rising needs an ageing population brings.

In Japan everyone starts contributing once they reach 40. In Germany everyone pays something towards that cost from the time they start working, and pensioners contribute too. Currently 1.5% of every person’s salary, and a further 1.5% from employers or pension funds, are ringfenced to pay for care in later life.

Older people in Germany who have had their needs assessed can use the money to pay carers to help them with personal tasks at home, or for care home fees or even to give to relatives and friends for helping to look after them.

Adopting a similar approach would let Johnson say he has ended the situation whereby some pensioners deemed too wealthy to qualify for local council-funded care have to sell their homes to pay care home costs, which can exceed £1,400 a week.

One source with knowledge of the government’s deliberations said: “The latest thinking is that there’s a preference for some sort of Japanese-style model where once you are over 40 you start paying into a central risk pool. They are deadly serious about that.”

Officials are looking into the exact mechanism by which over-40s would pay – whether through a payroll tax or insurance. But social care experts cautioned that any insurance model would have to be compulsory to ensure people paid.

The Conservative MP Damian Green also sees payments by over-40s as the way to resolve the funding question.

However, the Treasury is understood to harbour doubts about moving in that direction. “There are vast differences of opinion within government about this,” the same source said. And it risks angering a generation who will have paid, or still be paying, off their student loans and may have a mortgage and the costs of rearing children to meet.

But a shift to over-40s paying more looks likely to find favour with campaigners. Caroline Abrahams, the charity director at Age UK, said: “Some older people may look askance at the idea of only the over-40s paying to fund a new national care system. However, if that’s what our government is considering embracing here than it may be rather a good deal, since that system offers a level of provision and reassurance that we can only dream of here at the moment.

Introducing a comprehensive and reliable system like that in Germany and Japan would “arguably [be] an appropriate act of national atonement after the catastrophic loss of life we’ve seen in care homes during the pandemic”.

The ex-Liberal Democrat MP Paul Burstow, who was social care minister in the coalition government from 2010-12 and is now chair of the Social Care Institute for Excellence, said: “Introducing an insurance contribution from the over-40s would help put social care on a firm footing for the future. This approach has already been adopted in other countries on a mandatory basis to ensure risk is fairly spread and sufficient funds are raised.” Whatever social care reform is decided upon needs to “avoid the lottery of huge lifetime care bills”, he added.

This month Sir Simon Stevens, the chief executive of NHS England, increased the pressure on ministers to solve the social care crisis. In an interview on BBC One’s The Andrew Marr Show on 5 July to mark the 72nd anniversary of the service’s creation, he said: “I would hope that by the time we are sitting down this time next year, on the 73rd birthday of the NHS, we have actually, as a country, been able to decisively answer the question [of] how we are going to fund and provide high-quality social care for my parents’ generation.”

His intervention is thought to have irritated ministers.

A Whitehall source said: “As we come out of the Covid-19 pandemic some of the issues that were put on pause during it – like obesity and social care – have come back on stream. The social care problem has been around for ages and there is a renewed focus now on getting it fixed.”
What's your thoughts on this? Personally, I think it's bang out of order to ask people that have been paying in for at least 20-25 years, to pay even more. If tax has to be raised to pay for this, then that should apply to every taxpayer. Including Boots and Amazon and Starbucks etc.
 

1eyedcoot

Well-known member
I assume there will be a threshold for this tax - so the question is, will they implement a second threshold depending on higher levels of income, or are they going to increase it for everyone at the original threshold?
 

Imjustalawnmower

Well-known member



What's your thoughts on this? Personally, I think it's bang out of order to ask people that have been paying in for at least 20-25 years, to pay even more. If tax has to be raised to pay for this, then that should apply to every taxpayer. Including Boots and Amazon and Starbucks etc.
I wasn't aware of this. Thank you for raising it @Eliza. Mr Lawnmower and I are both retired, he has his bog basic state pension and I currently have my work pension, having been caught in the change of pension age rules. We aren't highflyers or wealthy by any body's standards but neither are we on the breadline. We consider ourselves lucky! What I'm taking from this is that having worked all my life and therefore been over the assessment levels and unable to claim any rebates or benefits myself, having already paid my bit for every other bugger as well as myself, and having been fiddled out of 5 years pension, I can now look forward (potentially) to not only being taxed on income and then taxed on pension as unearned income, but further taxed to support myself. Bloody marvellous! Pays to be responsible, careful and live within your means - not:mad: I appreciate the elderly need care, we've cared for aging sick parents with cancer/emphysema /heart proplems/dementia for 30 years, and no doubt we are shuffling forward in the queue. It doesn't have anything to do with Brexit, or with the deficit caused by corona virus of course!
 

Fin

Well-known member
We pay more tax in Scotland compared to England. I'm assuming this is purely England they are bleating on about which for some reason the media thinks constitutes the whole of the UK.
 
OP
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Eliza

Eliza

Well-known member
I wasn't aware of this. Thank you for raising it @Eliza. Mr Lawnmower and I are both retired, he has his bog basic state pension and I currently have my work pension, having been caught in the change of pension age rules. We aren't highflyers or wealthy by any body's standards but neither are we on the breadline. We consider ourselves lucky! What I'm taking from this is that having worked all my life and therefore been over the assessment levels and unable to claim any rebates or benefits myself, having already paid my bit for every other bugger as well as myself, and having been fiddled out of 5 years pension, I can now look forward (potentially) to not only being taxed on income and then taxed on pension as unearned income, but further taxed to support myself. Bloody marvellous! Pays to be responsible, careful and live within your means - not:mad: I appreciate the elderly need care, we've cared for aging sick parents with cancer/emphysema /heart proplems/dementia for 30 years, and no doubt we are shuffling forward in the queue. It doesn't have anything to do with Brexit, or with the deficit caused by corona virus of course!
I wonder whether retired people will be exempt? And it would just be workers that are taxed maybe?
 

ShatnersBassoon

Well-known member
I agree, it's unfair on those who've been paying for decades already, many of whom will already struggle to afford a comfortable retirement without having less to put in the pension pot. That group doesn't have the time to now make a plan B for later life based on a lower income.
 

Hotsoapywater

Well-known member
I wasn't aware of this. Thank you for raising it @Eliza. Mr Lawnmower and I are both retired, he has his bog basic state pension and I currently have my work pension, having been caught in the change of pension age rules. We aren't highflyers or wealthy by any body's standards but neither are we on the breadline. We consider ourselves lucky! What I'm taking from this is that having worked all my life and therefore been over the assessment levels and unable to claim any rebates or benefits myself, having already paid my bit for every other bugger as well as myself, and having been fiddled out of 5 years pension, I can now look forward (potentially) to not only being taxed on income and then taxed on pension as unearned income, but further taxed to support myself. Bloody marvellous! Pays to be responsible, careful and live within your means - not:mad: I appreciate the elderly need care, we've cared for aging sick parents with cancer/emphysema /heart proplems/dementia for 30 years, and no doubt we are shuffling forward in the queue. It doesn't have anything to do with Brexit, or with the deficit caused by corona virus of course!
We're in a similar position to you, lawn. My h on an army pension and I have a monthly income from mine. Which has tanked. We always said about care for my h if needed we would do it ourselves as I'm younger than him.

Older people in Germany who have had their needs assessed can use the money to pay carers to help them with personal tasks at home, or for care home fees or even to give to relatives and friends for helping to look after them.

This already happens in England and Wales. Its called direct payments so that people remaining in their homes who pass assessments are paid to employ a PA to assist with daily living.
 
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Fin

Well-known member
The cost of private care/nursing homes is extortionate as we know from experience as my MiL was due to go into one a couple of days after she passed away. 6K per month it was going to cost as they weren't entitled to any discount, the health board topped that up with around 1K a month for personal care (they pay that automatically for everyone) therefore for each 'private' resident they got 7K. I'm not sure how it works if someone needs to go into full time care but doesn't have the funds to pay for it. I assume the government foot the bill? We were absolutely shocked at the cost.
 

Gavlar

Well-known member
The cost of private care/nursing homes is extortionate as we know from experience as my MiL was due to go into one a couple of days after she passed away. 6K per month it was going to cost as they weren't entitled to any discount, the health board topped that up with around 1K a month for personal care (they pay that automatically for everyone) therefore for each 'private' resident they got 7K. I'm not sure how it works if someone needs to go into full time care but doesn't have the funds to pay for it. I assume the government foot the bill? We were absolutely shocked at the cost.
I think they do Fin, my friend's mum's house was sold three years ago for about £200k, I remember them saying it would pay for three years worth of care, then the option is either the family pay up or the mum is moved into a smaller room without French doors and a little patio/any trimmings because thats what the state will provide.
 

Hotsoapywater

Well-known member
He's targeting the most economic active labour market with the over 40s is my wild guess at this one. Less childcare is more likely, so pricing out working families - which I agree with. I think young families have enough to contend with when working.

However, it is ill thought out. The tax free threshold shouldn't raise and as PPs have said, corporation tax should be stamped down upon.

The cost of private care/nursing homes is extortionate as we know from experience as my MiL was due to go into one a couple of days after she passed away. 6K per month it was going to cost as they weren't entitled to any discount, the health board topped that up with around 1K a month for personal care (they pay that automatically for everyone) therefore for each 'private' resident they got 7K. I'm not sure how it works if someone needs to go into full time care but doesn't have the funds to pay for it. I assume the government foot the bill? We were absolutely shocked at the cost.
In England, a charge may be placed on any asset over £23k by LA. That means a property can be sold if there are no liquid assets to pay for social care in a care home.
 

DropZoneOne

Well-known member
I don't disagree in principle with increasing NI contributions to pay for social care. But not aiming it at a particular age group, especially the one that's already been hit by the rising pension age.
 

Imjustalawnmower

Well-known member
The cost of private care/nursing homes is extortionate as we know from experience as my MiL was due to go into one a couple of days after she passed away. 6K per month it was going to cost as they weren't entitled to any discount, the health board topped that up with around 1K a month for personal care (they pay that automatically for everyone) therefore for each 'private' resident they got 7K. I'm not sure how it works if someone needs to go into full time care but doesn't have the funds to pay for it. I assume the government foot the bill? We were absolutely shocked at the cost.
We looked after mil in our home for 15 years until her dementia became too severe for home care. She was in a home for about 2 years at around £2.5k a month, funded by the govt as she'd managed to fritter away over £100k before we cottoned on to her illness. Mind you, if she hadn't already lost the money it would have gone on fees
 

Hotsoapywater

Well-known member
We looked after mil in our home for 15 years until her dementia became too severe for home care. She was in a home for about 2 years at around £2.5k a month, funded by the govt as she'd managed to fritter away over £100k before we cottoned on to her illness. Mind you, if she hadn't already lost the money it would have gone on fees
My MIL told her children she would not go in a home. We didn't have her for long at home, but we brought her home from hospital as we knew she was going. We had to fight against LA though. As they were recommending very early on that she be placed in a home.

With a nurse as a daughter, a granddaughter, a police officer as another daughter, when my in laws get together, they're quite formidable, services left it to us.

I haven't an issue nor have I in paying taxes. I've paid through the nose over the years. Like the next person. I think we need choice. Elderly residential care certainly needs scrutiny. Hancock has misfires on this one and I think it needs to go back to the treasury to decide. Not him.
 

Fin

Well-known member
In England, a charge may be placed on any asset over £23k by LA. That means a property can be sold if there are no liquid assets to pay for social care in a care home.
It's the same up here. You have to give the LA full and open access to your financial situation. In our case 'due to the pandemic' rather than sign a mandate giving them the authority to contact your banks for a statement of financial affairs because it would take too long, FiL had to provide them with a copy of all bank statements to make the job easier.

We had to fight against LA though. As they were recommending very early on that she be placed in a home.
As you know we had a similar situation, sadly despite us fighting very hard against it, in the end they couldn't provide home care nor could we source it privately, partially due to location.
 
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