England’s social care cost cap

The government has revealed more information on how the £86,000 social care cost cap will work in practice, which is less generous than expected. Have you factored the cost of care in your retirement plans?

More details have emerged on the £86,000 social care cost cap for England.

At the start of September, the Prime Minister announced long-awaited plans for the funding of social care in England (Wales, Scotland and Northern Ireland all have their own social care funding regimes). Alongside the announcement came the news of a new Health and Social Care Levy, effectively adding 1.25 percentage points to the National Insurance contributions of employers, employees and the self-employed throughout the UK from April 2022.

Two of the key features of the proposals, due to start in October 2023, were:

In mid-November, the government revealed more information on how the cap would work in practice. It is less generous that had been expected:

The third point means that if you have capital of £106,000 or more, you could find yourself paying up to the cap to meet your care costs. Below that level of wealth, the risk is that you will pay until you reach the £20,000 lower capital threshold.

The cost-conscious hand of the Treasury has been blamed for the new interpretation of the fee cap. Whether or not that is true, the change is a reminder that the potential cost of care still needs to be built into your retirement plans.

The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.