Knife in the back for pensioners..

fretmeister

Fretwired said:

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

National insurance doesn't cover the cost .. nowhere near. The sooner governments come clean the better.

I know that.

That's also why I'd be happy if it was increased. Voluntary systems have the age old problem that many won't bother and then end up in poverty.

TheBigDipper

quarky said:

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

They shouldn't be paying twice.

They should also have transferred ownership of the house to the kids by then. If death occurs more than 7 years from the date of the gift there won't be any inheritance tax on it.

That is what seems wrong to me. It means the rest of us are picking up the bill, when the family could afford it, but won't have to pay for it. And yes, they may have paid NI for 40 years, but they may also have had a pension for 20+ too. No one should be broke because of the cost of care, but with an ageing population, why should the cost fall on everyone else when they can afford it? Not sure there is any easy answer besides means testing, and looking closely at the transference of assets (including houses) to kids.

I do think a £100k limit is much more reasonable than £24k though!

If you've worked for 45 years and paid taxes and NI, you will have been paying towards the healthcare of people 20-30 years older than you. That's in the expectation that people 20-30 years younger than you will be paying your healthcare costs when you've retired. It's an informal contract with the state that seems to have been broken already and this would make it more so. 

I think this will lose the Conservatives some votes. They're presumably hoping to gain more votes from other sectors of the voting public.

fields5069

Taxing twice or three times for the same thing is a Tory speciality. They still want to charge a Severn Bridge toll FFS.

ThePrettyDamned

fretmeister said:

Fretwired said:

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

National insurance doesn't cover the cost .. nowhere near. The sooner governments come clean the better.

I know that.

That's also why I'd be happy if it was increased. Voluntary systems have the age old problem that many won't bother and then end up in poverty.

I personally also feel people heavily underestimate the cost of care, and the likelihood they'll need it. 

If you are unlucky enough to require nursing as well as a care home, your costs are vast. 

this site is interesting. 10 years of care home plus nursing in the EoE typically costs nearly £500,000. 

Fretwired

fretmeister said:

Fretwired said:

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

National insurance doesn't cover the cost .. nowhere near. The sooner governments come clean the better.

I know that.

That's also why I'd be happy if it was increased. Voluntary systems have the age old problem that many won't bother and then end up in poverty.

Take out an insurance policy .. there are loads about and if you start young they don't cost much. I'll check but I recall that to fund healthcare, pensions and welfare would take an eye watering rise in NI. Even Labour baulked at the idea and headed down the death tax route.

Insurance:
Edit: forget that - you need assets.

Jalapeno

Fretwired said:

Jalapeno said:

quarky said:

Or is it? Is it really fair that as people get older, they can pass on their £500,000 house to their kids and expect the state to pick up the cost of their care? I must admit, that doesn't seem right to me.

http://www.msn.com/en-gb/news/uknews/tories-to-cut-winter-fuel-payments-for-wealthiest-pensioners-as-they-launch-manifesto/ar-BBBfr2Z?li=AAmiR2Z&ocid=spartanntp

Just to challenge that - is it fair if you live with a parent in the family home as a carer that you lose your home due to care costs of your parent (albeit care at home or when they have to go to residential care) ?

But who owns the house? Who paid for it? 

It's their home - they could have lived there for 50-60yrs.

You could argue that the child has paid indirectly into the house purchase/maintenance their whole working life.

If you apply a strict ownership test it means that the resident offspring will then become the responsibility of local government to find them housing (unless they are well off themselves).

holnrew

Makes a change from young people being stabbed in the front

sw67

A workmate of mine has just been through this - assets stripped from over 200k to 14k over 5 years in a council run home. He questioned the cost of care many times and was even told that his father was subsidising the residents without assets. The family home should be exempt and i don't mind paying more tax to fund it.

mart

fretmeister said:
...

If you gift a house and death occurs more than 7 years after the completion of the conveyance then it is not subject to Inheritance Tax.

https://www.gov.uk/inheritance-tax/gifts

This is correct about Inheritance Tax.

But the rules about paying for care are different, and they can go back much further than 7 years. From what I recall, it depends on the local authority - some go back further than others. And I'm pretty sure you won't find anywhere that states definitively how far back any authority goes - there are no limits.

guitarfishbay

It's all so based on luck.  None of us know if we or our family members will need care and for how long.

The 7 year gift thing is also partially down to luck and the viability of the planning.  A person can pass away unexpectedly at any time, it seems arbitrary really.  

My ex's parents were farmers who owned two large farms, the total assets including all machinery was in the millions.  It all got gifted to the son as soon as he was old enough to take over so that no inheritance tax would be paid, he used some capital to build his own house and lives the other side of the field to his parents.

Yet there are people in London whose family homes alone exceed the inheritance tax threshold, if they were to pass away unexpectedly their children would be landed with a bill and possibly have to sell up to pay it.

fretmeister

mart said:

fretmeister said:
...

If you gift a house and death occurs more than 7 years after the completion of the conveyance then it is not subject to Inheritance Tax.

https://www.gov.uk/inheritance-tax/gifts

This is correct about Inheritance Tax.

But the rules about paying for care are different, and they can go back much further than 7 years. From what I recall, it depends on the local authority - some go back further than others. And I'm pretty sure you won't find anywhere that states definitively how far back any authority goes - there are no limits.

The limits are quite easy to find actually.
 
Janet and John bit:
http://www.whentheygetolder.co.uk/care-fees-funding-and-deprivation-of-assets-the-rules/

Official Guidance:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/301250/CRAG_34_April_2014.pdf

and the rules themselves:
http://legislation.data.gov.uk/uksi/1992/2977/made/data.htm?wrap=true



"CRAG states that it would be unreasonable for a Local Authority to decide that there was a motive to qualify for greater care fees funding if the gift was made at a time when the person making the gift was fit and healthy and could not have foreseen the need to move into care."


"If a gift leaves your parent unable to pay their care fees then the Local Authority still has a duty to provide care. If, however, an asset was given away within six months of your parent entering care then the Local Authority has statutory powers to recover the asset or lump sum of money, from the person to whom the asset was transferred, in order to pay it towards care fees. So if the transfer of George’s house took place in the six months before he went into care his children could find themselves paying his care bills."

Fretwired

guitarfishbay said:

It's all so based on luck.  None of us know if we or our family members will need care and for how long.

The 7 year gift thing is also partially down to luck and the viability of the planning.  A person can pass away unexpectedly at any time, it seems arbitrary really.  

My ex's parents were farmers who owned two large farms, the total assets including all machinery was in the millions.  It all got gifted to the son as soon as he was old enough to take over so that no inheritance tax would be paid, he used some capital to build his own house and lives the other side of the field to his parents.

Yet there are people in London whose family homes alone exceed the inheritance tax threshold, if they were to pass away unexpectedly their children would be landed with a bill and possibly have to sell up to pay it.

I don't get that as working farms are exempt. My sister's partner's family have a massive farm that has been passed down through the family for generations.

Voxman

quarky said:

Or is it? Is it really fair that as people get older, they can pass on their £500,000 house to their kids and expect the state to pick up the cost of their care? I must admit, that doesn't seem right to me.

http://www.msn.com/en-gb/news/uknews/tories-to-cut-winter-fuel-payments-for-wealthiest-pensioners-as-they-launch-manifesto/ar-BBBfr2Z?li=AAmiR2Z&ocid=spartanntp

You want to talk about fair?

Is it fair that someone who has already paid tax on EVERYTHING throughout their lives:

1. Income tax on their earnings and their pension and their savings (when interest used to be paid!)
2. Capital gains tax on any asset that they have acquired and sold at a profit
3. Corporation tax on the profits of any business they built up
4. VAT on goods & services purchased throughout their lifetime
5. Car duty, road fund licence, TV licence (all taxes by another name), P11D on company benefits, etc etc
6. National Insurance (just another form of tax)
7. Council tax
8. Umpteen duties (ie tax) Cigarette, alcohol, petrol duty, airline duty, Excise duty
9. Insurance premium tax
10. Stamp duty


That when they try to pass down to their children whatever is left their children are mugged blind by the government to the tune of another 40% of their assets (less a modest and inadequate 'allowance' that has not kept pace with inflation let alone rising property prices, esp in London).  This is a tax applied after all the above taxes have already been paid!! 

Fair? IHT is nothing less than legalised Government thuggery and it should be stopped completely for ordinary people and reserved only for literally the mega-wealthy.  

So no, people shouldn't have to pay for their care - the government already took their money throughout their lives on everything they had. They spent the tax unwisely and now expect people to pay all over again. 

And as for the NHS - the ratio of managers/administrators to trained medical staff is 4:1!  Its one of the most corrupt systems in the world, and if you want to save billions even reducing that ratio to 3:1 will solve NHS funding problems overnight. 

I had to pay for my mothers care and on a modest estate my sister and I had to pay some £114,000 of IHT and we had to pay it in advance before selling her home.  Don't talk to me about fair! 

Teetonetal

I absolutely think that people should pay for their own care until the money runs out. But also that the children should not pickup the cost.

Fretwired

Teetonetal said:

I absolutely think that people should pay for their own care until the money runs out. But also that the children should not pickup the cost.

^^

This

Fretwired

Voxman said:

And as for the NHS - the ratio of managers/administrators to trained medical staff is 4:1!  Its one of the most corrupt systems in the world, and if you want to save billions even reducing that ratio to 3:1 will solve NHS funding problems overnight. 

Have you got some evidence of that? I'd be interested in reading it.

digitalscream

Teetonetal said:

I absolutely think that people should pay for their own care until the money runs out. But also that the children should not pickup the cost.

By definition, that means the children are picking up the tab in the form of losing their inheritance.

Either way, we're heading for something that's never happened before; pretty soon, there'll be a generation in which the vast majority inherit nothing of value from their parents, because the house itself has been spent on care (and more people need care than ever before). That's going to be an interesting time.

For what it's worth, there seems to be a shift in the care industry from residential homes to care-in-the-community according to my wife (she's worked in the care industry for 7 years or so now). The weird part of that is that in 90% of cases, it would actually be better for the staff and cheaper for the elderly to hire somebody themselves. That way, those being cared for get somebody (or a couple of people) consistent who's invested in them, and the staff themselves get to avoid all the bullshit that comes with zero-hour contracts, minimum wage (which their employer usually has to make up to the National Living Wage because they're so tight on what constitutes "work") and the like.

If my wife or I ever need care, that's exactly what we're going to do. Fuck the care companies and residential homes; very few of the staff are properly qualified to do their jobs (even the seniors, who're legally allowed to dispense medication!), and even less give a shit about the people in their care.

hywelg

fretmeister said:

They have paid National Insurance for 40+ years at that point. So they have paid for that care.

Myth.

So you paid some tax. And you think that entitles you to £2k a week in nursing home fees? For how long? For how many people? Everyone?

Nuts. Current taxation pays for current expenditure. Barely.

guitarfishbay

Fretwired said:

guitarfishbay said:

It's all so based on luck.  None of us know if we or our family members will need care and for how long.

I don't get that as working farms are exempt. My sister's partner's family have a massive farm that has been passed down through the family for generations.

I'm not a lawyer or an accountant, all I know is she (my ex) told me the everything got handed to the brother for tax reasons.  To be honest, I never questioned this or looked it up. 

This link suggests that machinery and live stock is not exempt.  https://www.gov.uk/guidance/agricultural-relief-on-inheritance-tax

I'm familiar with arguments regarding keeping farms working, but not all the land was working land so I'm not sure how that affects tax. They had planning permission to build on one of the pieces of land, when I knew them one house had been built and sold, and a second one was built which the son was living in until he could avoid capital gains tax with the idea to then build a further home which would be his actual home.  There was also a plant and machinery sales/hire business, dealing in tractors and other agricultural machinery .

It doesn't especially seem fair if that amount of wealth can be transferred tax free if another scenario with similar value transfer could be taxed entirely differently due to a person passing away unexpectedly before an arbitrary period of time is up.

hywelg

guitarfishbay said:

My ex's parents were farmers who owned two large farms, the total assets including all machinery was in the millions.  It all got gifted to the son as soon as he was old enough to take over so that no inheritance tax would be paid, he used some capital to build his own house and lives the other side of the field to his parents.

Farms are subject to special rules anyway. But for normal housedwelling people, the 7 year rule only applies if you no longer derive any benefit from the gift. So if you give away a company and remain a shareholder you'll get clobbered. If you give away a house but remain living there, you'll get clobbered. If you give away a house to your offspring and they live there but pay you some 'rent' you will fall foul of the rule.