Paying for social care - good news or bad news?

GracesGranMK2 I did not say we should not pay, I think we all should pay for whatever fair scheme is devised. I do expect we will have to pay for our care and I am prepared to. I doubt that once extra taxes begin they will be removed.

Interesting Gilly. If I have got this right you think tax should be more equal on both income and capital.

Currently people pay tax on income and inheritance tax but there is a much higher threshold for the second (which is actually Capital Transfer Tax I think). If I have understood what you are saying I would agree with you about the disparity between these taxes. You start paying tax on an income over the personal allowance level of £11,500 but you do not start paying CTT until it is £325,000.

If you need to tax this generation of pensioners because no National Care fund was set up for them to pay into you would just need to reduce the £325,000 current floor.

I agree, GGMK2, that sounds eminently reasonable to me, but I can't see TM doing it because it's not a vote-winner( for her).

GracesGranMK, If you need to tax this generation of pensioners because no National Care fund was set up for them to pay into you would just need to reduce the £325,000 current floor.

How would that happen if the £325,000+ was only their home and not liquid assets?

Sorry Norah I don't see the problem.

This is a tax which is taken when you die and someone inherits so it wouldn't be taken until the estate was sorted out so it can be on what you call liquid assets, a house or a combination of both. This is the level at which Inheritance Tax starts but I have to admit I don't know much about Inheritance Tax. Perhaps someone could give us a better insight

Just found another bit. If you are giving your house to your children currently, you do not pay Capital Transfer Tax until your estate is 425,000. Also, if you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £850,000.

There are also various reliefs and exemptions. No wonder the rich get richer but those living on their income with little capital find they are getting poorer year by year.

All this is where it stands currently.

All I am looking for is fairness and the ability for everyone to have reasonable care as we can all get reasonable health care.

GracesGranMK2 Wed 24-May-17 15:33:11

You quote my words:-

" Now it could be argued that ALL care should be free and nobody should have to pay but I think that ship has sailed years ago."

Your response :-

" Not free POGS - that would be as silly thing to think we could have - but free at the point of need just as the NHS is. We pay for the NHS though taxation, over a lifetime and whether we need it or not, as an insurance. This need not be any different".

I'm not sure what you are saying / trying to prove to be honest.

On one hand you are saying " Not free POGS - that would be silly". Then go on to say it should be " free at the point of need".

At some time or another we have to wake up and understand that our paying National Insurance is not sufficient funding to cover our growing aging population problems, the wonderful life enhancing drugs and procedures that cost the earth compared to the what limitations past NHS provision had to cater for.

Technological breakthroughs have obviously proceeded at such a pace it is ridiculous to believe the NHS can function as it did in years gone by financing it solely by Income Tax , even by hammering the top wealth earners.

As times change so must new thoughts and considerations be debated, stagnation of preconceived ideas and practices will only lead to a further erosion of health and social care.

As for my 'Socialist' comment I thought the following applied:-

Socialism: Socialists are motivated by the desire to improve the quality of life for all members of society. They believe in a political system characterised by strong state direction in political and economic policy. Another key idea is the ' 'redistribution of resources ' to redress inequalities inherent in a free-market economy."

Out of interest, what do you think about the fact some who are in 'residential care ', now , could/would possibly be in a better position by keeping £100.000.00 not the £23.000.00 as stands at the moment? Winners and losers in all of this.

Time for Cross Party Consensus me thinks.

Just because the Tories are not carrying out the intention of the NHS does not mean it is not possible POGS, it just means the Tories are trying to dismantle it and privatise as much as they can.

I have answered your last question, at great length throughout this thread.

Perhaps those of us already retired could have the option to pay a fixed amount per couple as a lump sum - maybe £30K and then pay whatever is the agreed amount/percentage for those still paying NI but only the care element.
Or pay the NI agreed percentage and a fixed priced lump sum if you need care in any form.

There is no current 'Care' element in NI Welshwife. Nothing has actually been set up that is dedicated in that way. Care is paid from general taxation which is then allocated by the Government and passed to councils. There is actually not National Health element either. This comes from tax too.

If there was a hypothecated tax called National Health and Care Insurance it would mean we had more say over whether we paid more, and for what, so governments would loose some of their power to hive off money to their pet projects (often just before and election, if that doesn't sound too cynical). This should, of course, bring general taxation down as the health and care cover comes from there at the moment.

I realise that GG2 - I was assuming that path may have been the one per sued and then it would be fair if pensioners paying tax also paid that extra element of NI.

Welshwife what would happen if we paid say £30,000 per couple 'upfront' for care - as some people already do through an insurance policy - then found that we either did not need care after all or that we died very suddenly soon after paying over this lump sum?
I am thinking of AVCs where money was paid through salary into an insurance scheme and an annuity bought on retirement. I will have to live well into my 80s to get back what I paid in and some people get scarcely any return on their hard-saved money because they die not long into retirement. The insurance company do not return the rest of the money to the heirs.

Isn't that what insurance is all about? You pay for it just in case you need it, like car and household insurance.
I've never claimed in the seven years I've lived here, but I still pay it just in case.
Hopefully we will pay into a social care insurance scheme, run by the government, not private companies who need profit, and we will never need to claim on it by going into a care home.

Yes, but paying out £15,000 lump sum per person then perhaps twelve months later dying suddenly ... I was just wondering if the insurance company would refund the money.
I very much doubt it.

A social care insurance scheme paying weekly/monthly sounds like a good idea - some people may never need to claim on it, others will and those who die suddenly will only have paid instalments not a huge lump sum.

Try looking for an insurance policy that would cover care costs. I suspect they would want a hell of a lot more of a premium than a mere 30k and they would be wanting to exclude most of us on the grounds of our iffy medical history or unhealthy lifestyles.
But I could be wrong. Has anyone tried.
Someone once told me how much they pay, as a health couple in late 70s, to be in BUPA. Shocking amount

That's why it should be run by the government on NI lines.
They have their own actuaries.

"Free at the point of need" means that when you go to your doctor or A&E, emergency or elective surgery at a hospital, etc., etc., you do not have to pay upfront or prove that you have enough capital or insurance to cover the cost. But it doesn't mean the NHS is free - we pay for it. Whether we pay enough for it is debatable, but governments seems to spent money on all sorts of other projects that, in my view, are nowhere near as valuable or vital as a decent health care system - for instance HS2.

Jalima1108 The point that some of us are trying to make is that we should all contribute to the increasing cost of elder care - whether we ultimately need it or not.

In my view, it is wrong that someone's beneficiaries can inherit up to £425,000 without paying any inheritance tax and yet someone who had formerly been in exactly the same position financially but, due to a combination of ill health and frailty, then needs constant care at home or in a residential setting will be paying out between £800 and £1,000 per week (or possibly more) for the remainder of their lives. They will see the inheritance they had hoped to leave to members of their family/charities, etc, hugely reduced whilst more fortunate people's estates are left intact.

I still say that we should, like other European countries, significantly reduce the threshold for inheritance tax but structure it in such a way that the percentage payable starts low and increases in line with the amount of capital/assets in the estate. In such a way, people with no or very little capital/assets would make no or a very small contribution, rising to those who are very wealthy who would make a larger contribution. I think that's fair.

No doubt someone would say this is unfair, impractical or would be circumvented in some way but it seems that such a system works in other countries so why not here? Probably because British people have a knee jerk aversion to the whole idea of inheritance tax, even though many of the people that oppose it would not even be liable for it.

I am not sure where you are going with this Welshwife. Pensioners are not the only ones paying tax, people who are working are too and the tax from both goes to the same things. I'm afraid I don't understand what you mean by then it would be fair if pensioners paying tax also paid that extra element of NI.

Jalima1108 The point that some of us are trying to make is that we should all contribute to the increasing cost of elder care - whether we ultimately need it or not.
That's exactly what I meant because I have been saying for a very long time that I do not understand why people of retirement age no longer pay NI - we should be paying at a reduced rate to cover health and care as we will be the ones more in need of it. Surely a reduced rate of, say, £5 per week (over a certain level of income) would bring in much-needed cash?

Eloethan I said:

A social care insurance scheme paying weekly/monthly sounds like a good idea - some people may never need to claim on it, others will and those who die suddenly will only have paid instalments not a huge lump sum.

I also said that I thought that pensioners should pay a reduced rate of NI on more than one occasion.

This proposal has more questions than answers. When is house valued? Will there be interest on deferred charges? Does money paid go to local authorities? What private companies will grab this as an opportunity to gain?
I think we were working towards a cross party long term scheme before Theresa May decided she had a cunning plan.... this is what is desperately needed, to give peace of mind.

On the subject of houses, we paid a mortgage for 25 years, then lived rent free for another 25 years...a good bargain in itself compared to someone paying rent for 50 years.
Any inheritance is an unearned bonus.

I would not be surprised to see this quietly shelved and forgotten

Yes GGm2 that is exactly what I meant.

I really can't see the difference between someone having a few hundred thousand, millions even in the bank in hard cash or income and someone who has gained that same amount via a massive increase in their house value.

It could still be treat as a taxable gain. I appreciate that this idea wouldn't be popular. There again are any ideas where anyone pays more tax ever going to be popular? I doubt it.

Strangely I am now arguing with my own argument.

I have a strong feeling Jalima that some of us have got at cross purposes. If I have contributed to that I am sorry but we sometimes need to unravel the points of the argument I suppose.

The issue with NI is, I suppose, that it only currently ONLY COVERS IN WORK BENEFITS AND END OF WORK PENSIONS so it was logical that you stopped paying after this point.

National Health has been paid from general taxation since its inception so we actually have no specific idea what we are paying or what it is buying for us all. Care was also paid from general taxation in the same way with money from general taxation being sent to councils who then arranged care. It is really important to understand that it is not currently part of NI.

As I see it we have two choices for this sort of model. We either add NHS and Care into NI or we have a separate NH&CI.

I prefer the second as governments would then have a fund and would have to explain what and why they were cutting things and what it would cost not to do that or to do something new. Currently we are very much in the dark about how much of our tax is for health and care and the ideology of a party can change this - or it may not, it may just be economics, but we need enough information to decide about this.

As for £5 a week from all - that would be a regressive way of doing it. At the bottom of the earnings curve the starting point of NI is £8,164 (which is close to what someone on Pension Credit would get). I am sure most would want to pay a little so they can be happy when they need help. Taking the German (I do not know of any other) 1.5% would mean they would pay about £2.40 per week whereas a person with, say, an income of £40,000 would pay around £11.50. I think such a progressive tax would be a better way as we can all move from more to less and back to more income and I think it should be made possible for as many of us to contribute as can.

Doing it separately from NI would make it easier for the Treasury, Political Parties and voters and we would just carry on with this when we retired while NI would stop having served its purpose.

I would conclude that a reduced version of NI would not serve the purpose we want it to as it currently does not cover health or care and because health and care should be paid for (as we are doing through general taxation) from work to end of life.