Funding the cost of Long Term Care

The new Chancellor, Rachel Reeves has scrapped a planned cap on care costs to help fill a “multi-billion-pound black hole” in the public finances that the Chancellor says was left behind by the Conservatives.

What was the £86,000 social care cap?

The cap, which had been set to come into effect in October 2025, would have introduced an £86,000 limit on the amount anyone in England would have had to spend on their personal care.

Who pays for care in the UK?

If you require a form of residential or nursing care, there will be costs involved in providing this. Not everyone is entitled to support from the state if their assets exceed established limits.

What are the current limits?

Currently, in England, anyone with savings over £23,250 has to pay the full cost of permanent, temporary respite or nursing home care. If your assets are below £14,250 your care will be funded in full.

Different thresholds apply in Scotland, Wales, and Northern Ireland.

What are your options for funding the cost of my care?

If you find yourself with assets and income above the threshold, you have a number of choices available to you. Depending on what assets you have, it may be suitable to use a combination of sources from:

• Income, including state pension
• Savings
• Investments
• Private pensions
• Immediate Needs Annuity
• Equity Release

Why does income matter?

Before using any capital to pay for your care, you should consider how your income can help towards the cost of funding care. The first stage will be to calculate your annual income, particularly your state pension and other pensions, but also factoring in interest and dividends from cash and investments.

How to decide what is best for you?

Working with a professional adviser will give you access to their expertise to determine the best way to fund care. There are lots of positives and some risks with each route you decide to take, which a specialist Financial Planner will be able to assess the most suitable option for you

Planning how to use your personal wealth to pay care costs is a complex area with many risks involved. It is important to work with suitably qualified and experienced professionals, independent of the influence of providers of financial products, who advise to the highest standards such as members of the Society of Later Life Advisers (SOLLA).