With an ageing UK population, the time will eventually come for all of us to consider how we will pay for care at home, either for ourselves or our loved ones. In this blog, Acumen explores four ways to make care at home more affordable and manageable.
If you or a relative would like to continue living at home well into old age, but need some help to retain that independence, home care could be the answer. Don’t let funding worries be a burden, with these four financing options.
1. Obtain local authority funding
To see if you or a loved one are eligible for local authority care, the first step is to obtain a Needs Assessment (sometimes called a Community Care Assessment) from your Local Authority’s social services department. They have a legal duty of care to carry out a needs assessment for anyone who might be eligible for local authority care, providing you with a professionally assessed care plan.
If care is needed, and you would like to apply for financial support, then a financial assessment is usually then carried out to assess all income, assets and savings to ascertain how much funding is required. Of course, there is no obligation to undergo such a test if you or your relative’s assets are certain to exceed the threshold. However, if you are less certain then it is a good idea to get assessed.
2. Claiming VAT discount
Certain goods and services are cheaper for anyone over the age of 60 or who might have a disability. This entitles you to many discounts of which most people are unaware. For those in need of mobility apparatus at home, it is worth knowing that ramps, grab rails, stair lifts, walk in baths with sealable doors, bath lifts and built in shower seats are eligible for the reduced VAT rate of 5%, rather than the usual 20%. For people with a disability, certain home alterations – like widening of doorways – and specialist equipment are exempt of VAT entirely.
Wondering how to get this VAT discount? Make sure you ask the supplier to apply your reduced VAT. It is important to remember that this reduced rate has to be applied by the supplier AND an installer. It does not apply if you install the mobility aids yourself. As ever, it is worth shopping around because not all suppliers choose to pass on VAT reductions because they are not strictly obligated to do so.
3. Equity release
Equity release enables you to receive either a tax-free cash lump sum or to ‘draw down’ smaller amounts of money as and when it is needed. This usually lets you remain in your property until you pass away or move into residential care. The cash sum raised against the value of the house is repaid when the house is sold. If the home is owned by a couple, the money won’t be repayable until the death of your partner.
There are two main types of equity release schemes. With a Lifetime Mortgage, you are loaned money against the value of your home. The older you are, and the greater the value of the property, the larger the cash sum available. There is no time limit or ‘end date’ to the loan and the total sum is only repayable when the property is sold.
The other type of scheme is the Home Reversion plan in which all or part of the property is sold to a Home Reversion company. They lease the property back to you and, in return, you receive a single lump sum payment. However, you can also choose to sell just part of your home initially and then repeat the exercise; this way you can take the payments in ‘draw down’ instalments. Crucially, with the Home Reversion option you lose sole ownership of the property but if getting the largest possible amount of cash from your home is your main aim, this route does produce the best results.
4. Self funding
There are several ways to self fund care at home if you are in the position to do so. Your options range from tapping into income drawn from pensions, work, property or investments, savings or financial help from relatives. Downsizing is another means to release equity or, if moving home is out of the question, letting a room to a lodger (space permitting) is a viable alternative.
It is worth noting that the price of home care in 2015, according to research by the UK Home Care Association (UKHCA), was estimated to be £13.66 per hour while live-in care costs ranged from £600 a week for an introductory service, to £1,600 a week for a fully managed nursing service.
You should always seek advice from a qualified independent financial adviser with expertise in this field to secure the best financing option for you or your loved one. Acumen has all the pre-requisite skills and expertise to guide your independent living aspirations. For more information, please contact us on 0151 520 4353, for free on 0800 170 7009, or email [email protected].