Posts tagged ‘George Osborne’

The Dilnot Report offers little help

It was thought that the Dilnot Report might help to reduce the cost that individuals have to contribute to Residential Long Term Care, but very little seems to have changed since the last report on this subject.

It looks as if a lot of people will still have their homes sold for Residential Long Term Care unless they plan effectively for such an eventuality.


The Report in Summary

The Dilnot Report is some 86 pages long with a substantial amount of supporting documents, but in short, the commission is saying:

  • Personal Care Costs should be capped between £25,000 and £50,000 with Dilnot’s preference being £35,000
  • An individual requiring care should be expected to pay between £7,000 and £10,000 per annum for “hotel/living” costs
  • Means Test threshold, currently at £23,250 or more should be switched to a sliding scale from £14,250 to £100,000
  • Estate cost approximately £2 billion each year on current care costs.

Some responses to the report have been:the man in the street

  • Too expensive
  • Cannot be taken seriously
  • Dead on Arrival
  • Lukewarm response from The Treasury
  • Pensioners face 2 billion granny tax
  • George Osborne wants to “strangle the proposals”

What it really means

The present proposals would not make much difference, for example, to an elderly lady who goes into a residential care home for four years, before she dies, and has a property worth £200,000 which is sold for the Care Home Fees.

Calculating average Care Home Fees, Personal Care, Hotel Costs, under the new scheme (capping at £35,000 and hotel costs not exceeding £10,000, the family would get £125,000 after all bills are paid.  Under present rules they would also have had to pay the council’s costs, so would receive £92,000.


The problem is getting bigger as we get older

Many who have to consider Residential Care Home fees have worked hard all their lives, were brought up believing they should save and buy their own home.  The expectation being that the “state” would care for them in their old age, and they would be able
to provide for their children and grandchildren.  Over 20,000 homes were sold last year to meet Care Home Fees costs, and this is only going to increase with an ever-growing elderly population.

Protect your home with professional planning

With proper planning these costs can be reduced, provided you have a professionally drafted will which includes the appropriate trust.  Or alternatively by setting up a Life Time Property Protective Trust (LPPT) you would be able to protect your house
from being sold and ring-fence your assets if you so desire.

The purpose for establishing a LPPT are manfold, and some are:

  • No Probate fees on the value of the property/assets in the Trust
  • No claim against the Trust can be made upon your death
  • Protecting the family assets from potential bankruptcy of beneficiaries
  • Financial protection from relationship failure

A side effect of a LPPT is that your property/assets are protected from being taken to pay for your care.  The LPPT offers effective protection from care fees provided that at the time the assets were protected it was not reasonably foreseeable that you would need to go into care.

Guest Author: Eric S Britt. Will Writer and Estate Planning Practitioner. Affiliated Member of The Society of Will Writers  Call 01480 270114 or Email: for a confidential, no obligation review of your circumstances.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

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The new Chancellor, George Osborne  delivered his first budget on 22 June 2010. He said his budget was ‘tough  but fair’ but described it as being ‘unavoidable’ due to ‘the years of debt and spending’ by the previous labour government.

News PhotoThe Chancellor’s package included various tax increases and spending cuts, some measures had been widely anticipated such as the increase in the VAT rate and an increase in Capital Gains Tax. The Chancellor stressed that his measures were intended to be fair ‘Everyone will pay something but the people at the bottom of the income scale will pay proportionately less than those at the top’.

As tax is not my preferred subject (I have highly experienced colleagues for dealing with that!) I will be brief:

The key announcements included:

VAT Rate rise – As anticipated the VAT rate will increase from 17.5% to 20% with effect from 4 January 2011.

Personal Allowance increase – The personal income tax allowance is to increase by £1,000 in April 2011 to £7,475. This is worth £200 a year to a basic rate taxpayer.

Capital Gains Tax increase – The Capital Gains Tax rate for higher rate taxpayers will increased from 18% to 28% from 23 June 2010. It remains at 18% for basic rate tax payers.

Entrepreneurs Relief extended – Entrepreneurs relief has been extended to a rate of 10% on the first £5m of gains as opposed to the first £2m.

Corporation Tax Rate cut – The Corporation Tax rate will be cut by 1% each year over the next four years until it reaches 24%. The Small Companies rate is to be cut to 20%.

National Insurance rise to stay – The National Insurance rate increases announced by labour remained intact and will still take place however the threshold at which employers start to pay will rise.

No change to Cigarettes, Alcohol and Fuel – No changes were made to duty on cigarettes, alcohol or fuel and the plan to increase the duty on cider from July was scrapped.

Freeze on Child Benefits – Child benefit is to be frozen for the next three years.

Changes to Tax Credits – Tax credits will reduce for families earning over £40,000 next year but for low income families they will receive more Child Tax Credit with the amount per child increasing by £150 above the rate of inflation.

State Pensions – The state pension is to be linked to earnings from April 2011 and is guaranteed to rise in line with earnings or 2.5% whichever is greater. The increase in the state pension age to 66 is to be accelerated.

For further details on the key announcements download a copy of our budget summary.

Alternatively come along to one of our Budget Seminars which we are holding on the 24th and 25th June where we will be providing planning advice as a result of the changes.

Disclaimer: This article is for general guidance only.  All taxation planning should only be undertaken after appropriate professional advice.  George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.