In every General Election since 1997 there have been pledges by the various political parties to resolve the funding of care for the elderly in the UK, yet nothing has happened. It even sparked a dramatic U-Turn by Teresa May in 2015 with her proposal for a so-called “dementia tax”. With the care system in crisis it will be interesting to see what the different political manifestos promise to solve the problem.
Although not strictly a tax matter, for many families funding care fees for the elderly is a bigger issue than inheritance tax (IHT). The current rules in England and Wales require the family to make a contribution to care fees where the person’s assets exceed £23,250, including the value of the family home.
The normal IHT planning strategy of giving wealth away and surviving for seven years does not necessarily work as the social care rules are based on the concept of “deliberate deprival” of the estate.
If the local authority considers that the transfer of assets was done deliberately to deprive the estate of assets to avoid paying care fees, then the transfer is ineffective.
Professional advice should always be sought to protect your wealth, secure the financial future of your beneficiaries and plan for IHT, a legitimately avoidable tax.
Our Beavis Morgan tax experts are available to guide you and advise you on the available strategies.
Contact your usual Beavis Morgan Partner.