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Long-term Care

In the UK, we are enjoying increasingly longer life expectancy because of higher living standards and advances in healthcare. Combined with a declining birth rate, this means our population is ageing. According to the Office for National Statistics (ONS), in mid-2022 there were 1.7 million people in the UK aged 85 years or over. By mid-2047, that number is projected to nearly double to 3.3 million, accounting for 4.3% of the total population1.

With increased life expectancy, it’s advisable, wherever possible, to factor potential care costs into any financial plans you have for the future.   

Is government support available?

The support you may be entitled to varies across the UK.

In England and Northern Ireland, any funding is currently based on the following capital limits:

  • Under £14,250: you will be entitled to local authority support. You won’t have to contribute from your capital, but you will be expected to contribute from income in excess of the personal expenses allowance (PEA) which is currently £28.25 per week in England and £27.19 in Northern Ireland.
  • Between £14,250 and £23,250: you will be entitled to some local authority support. You will have to contribute some capital (£1 per week for every £250 of capital between the lower and upper threshold), as well as income in excess of the PEA.
  • Over £23,250: you will be obliged to pay for the full cost of your care.

The capital thresholds for care home funding differ in Scotland. The thresholds for 2024/25 are as follows:

  • Lower limit: £21,500: you will be entitled to the maximum level of local authority support. You won’t be expected to contribute from your capital, but you will be expected to use your income to help fund your costs.
  • Upper limit: £35,000: you will be obliged to pay for the full cost of your care. If you have under £35,000 in capital, but your income is considered sufficient to fund your care, you will also have to pay all your accommodation costs.
  • Between £21,501 and £35,000: you will have to contribute £1 per week for every £250 of capital between the lower and upper threshold, and you will be expected to use your income to help fund your costs.

If you live in Wales, a capital limit of £24,000 applies to non-residential care, and a limit of £50,000 applies if you need to have residential care.

What does a means test include?

When a local authority performs a means test, most of your assets and savings are treated as capital but your home is normally excluded under the following circumstances:

  • Your spouse or civil partner still resides in the property
  • A disabled relative resides in the property
  • A relative aged 60 or over resides in the property
  • A child aged under 18 resides in the property
  • The person is in the first 12 weeks of requiring long-term care
  • Their care needs are only temporary

Will giving my property away exclude it from the means test?

The local authority is entitled to question whether or not you have transferred your property specifically to avoid it being included in the means test. There is no time limit for this.

How much will long-term care cost?

Costs are very different depending on whether you receive care in your own home or in a care home and also depend on how much support you need.

According to Laing Buisson, the average cost of residential care is between £27,000 and £39,000, rising to between £35,000 and £55,000 annually when nursing care is included2.

Planning for the cost of long-term care

Our advisers can assist you in planning for the potential expense of long-term care, tailoring our advice to your individual circumstances.

We can advise on the various funding solutions available to you, from purchasing an annuity (lifetime income) or raising capital through equity release, to invest in products that can pay an income to fund your care. You could use one of these options, or a combination of all three.

If you’re facing the prospect of paying for your, or a loved one’s, care, then let us help you make the best choices. Just get in touch.

The value of investments may fall as well as rise. You may get back less than you originally invested.

Think carefully before securing other debts against your home. Equity released from your home will be secured against it. To understand the features and risks, ask for a personalised illustration.

1ONS

2, Laing Buisson

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