Like childcare vouchers, tax free vouchers to pay for long term care costs should be offered to employees, suggests a childcare chain of nurseries.
Busy Bees, a day care nursery provider believes that a pot of eldercare vouchers accrued over 20 years would amount to over £100,000 if employees put aside £100 a week.
In an article by Health Insurance, Emily Perryman wrote that the pot of money could be used to pay care home fees or for care at home in old age, or employees could use the vouchers to contribute towards care costs for an elderly relative. “Siblings could also pool their vouchers to help pay care bills,” she wrote.
The suggestion is not without its caveats. One caveat stipulates that the vouchers are only spent with a registered care provider and, if an employee withdrew their money for another reason, income tax on the sum would be payable and upon death without using the account, the money would pass to their estate and to their heirs after inheritance tax was paid.
The suggestion is not without its caveats. One caveat stipulates that the vouchers are only spent with a registered care provider and, if an employee withdrew their money for another reason, income tax on the sum would be payable and upon death without using the account, the money would pass to their estate and to their heirs after inheritance tax was paid.
Busy Bees shared its idea by lobbying the government ahead of the government’s consultation on social care, due next summer.
Martin Green, chief executive of Care England, which represents independent care providers, said the proposal would give citizens the opportunity to save for their long-term care needs, and be supported to do this with some tax allowances.
“If we are going to meet the challenges of the future, we need to encourage people to save for their long-term care and the government needs to incentivise people to make provisions for the future.”
Clare Sheridan, principal at Aon Employee Benefits said that while something like this would be extremely helpful for a lot of employees, setting this money aside 20 years in advance seems a bit unrealistic.
She said that while the maximum amount of £100,000 seemed high, it would soon deplete. She cited Laing Buisson’s Care of Older People UK Market Report (28th edition, published May 2017) in which it stated that across the UK, the average weekly nursing home fee was £841, or £43,732 per annum.
Sheridan added: “No Government so far has had the appetite or desire to really take this challenge on, possibly because it is a difficult issue to address.”
Concluding, she said: “This idea has been on the boil for at least 10 years, but it needs some kind of tax exemption beneath it to get any traction and the Government has not wanted to open another salary sacrifice type arrangement. The direction of travel has been towards the top-up approach we see in the new childcare tax-free scheme. It is definitely a tax consideration.”
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