Our Budget Priorities - A Care ISA?

As George Osbourne puts the finishing touches to tomoroows emergency budget we wondered what people who are required to fund their own care might like to see.

Many 'self-funders' feel that their care should be funded by the state. They see it as a huge injustice that as soon as their home is sold to pay for care and the money invested, the tax-man immediately wants a share.

This reduces the return they receive and means that their money falls in value faster.

It is also counterproductive; without the drag of tax on their investments, many people could fund their care for life and preserve some funds for their family. Instead the treasury get their income and capital gains tax but leave the local authority to pick up the care bill when the money runs out.

Our Solution : The Care ISA

This would work like a regular ISA. When you invest you get your investment income (mostly) tax free and pay no capital gains tax. Our plea to Mr Osbourne would be for an ISA for people buying care services.

Where this would differ from a regular ISA would be in the amount that could be invested. A normal ISA currently allows a maximum investment of £10,200 a year. The Care ISA would allow the entire proceeds of a house sale to be invested, maybe to a maximum of the average house price each year. The ISA could then be used to pay a monthly amount to a bank account to pay the care fees.

People funding their own care would no-longer be forced to pay more tax than those remaining in their own home. It could save the exchequer a few pounds by encouraging investment for care funding and avoiding many running out of funds.

Posted in The carefeesadvice Blog

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