Care Home fees mean negative income but tax still has to be paid - unfairness overload!

Wanderings

Hi. I'm sure I'm not the only one to suffer from this feeling of injustice. My dad is in a care home suffering from dementia. He worked hard and provided for himself well in retirement and has a nice home which we have been renting out to boost his income. He is self funded as a result of careful financial planning. All of his pension income and his rental income contribute to his care costs but that still isn't enough and money has to be found from elsewhere to maintain his care home fees. 
Care home fees aren't an issue for us. He is absolutely in the right place and the staff are amazing. They should be paid well for the very difficult work they do. 
My issue is with him having to pay income tax when all of his income goes on paying for his care. Since he has been in care his hospital admissions have been zero, saving the NHS a fortune as previous admissions lasted an average of about 3 months whilst he recovered and went through repeated assessments.
Despite repeated applications he is deemed ineligible for Continued Healthcare Funding.
He is in receipt of Attendance Allowance, which is better than nothing. 
I have read up a little bit on the cap on how much someone should pay for their care overall and my understanding of that is it is going to be nigh on impossible to reach that cap once all the calculations are done. 
This may not be a subject that many people feel strongly about as, on the face of it, my dad is financially comfortable. Indeed, if he wasn't poorly and was able to carry on living in his home he would be financially independent and comfortable. It feels as though he is being financially punished for being poorly.
Is anyone aware of anything in the pipeline with care home costs being a legitimate expense to offset against income for tax purposes? 

tetrarch

I can't help with your problem, but I share your angst and anger at this brutally unfair process.

The CHC process is especially egregious as, in my experience, your father will NEVER meet the criteria for Care Home care as, (IMO) in order to actually qualify for the care the you would already be in a Nursing Care setting or in hospital. In my view the CHC is a scam, just a checklist invented to allow LA's and the NHS to justify self-funding.

It doesn't really help but you could consider the AA as a partial income tax rebate.

Regards

Tet

The_Unready

But where would you draw the line on what income is excluded from income tax because it's being spent on a worthy/vital cause?

Money donated to charity, perhaps, or money to pay off debts? There would always be someone or some organisation with a seemingly valid reason for tax exemption, but the system would be impossible to manage.

elsien

There isn’t a care cap at present anyway. It was mooted, but the government have kicked it further down the line. Just in case anyone was wondering. 

Wanderings

The_Unready said:

But where would you draw the line on what income is excluded from income tax because it's being spent on a worthy/vital cause?

Money donated to charity, perhaps, or money to pay off debts? There would always be someone or some organisation with a seemingly valid reason for tax exemption, but the system would be impossible to manage.

I don't disagree with your sentiment, but I would counter that my dad's self funding of care is not a cause or a charity - he has contributed to the national coffers all his working life and now all of his income and more besides is being spent on a health necessity, not a lifestyle choice. That is my issue. I can't see voices such as mine being heard as there are probably more worthy causes out there, but from my point of view it is all just so stacked against people in dad's situation and seems so monumentally unfair. 

p00hsticks

The_Unready said:

But where would you draw the line on what income is excluded from income tax because it's being spent on a worthy/vital cause?

I think that's what makes the idea unworkable. 

My elderly parents both still just about manage living in their own home but it's getting more and more of a struggle and I can see the time soon where they will need either carers coming in or to move in a care home. Like the OP's father, they pay income tax on their pensions, and if someone in a care home was exempted then why shouldn't they be too, when by struggling along in their own home (with family help) they are potentially costing the state less than if carers were involved or they had to go into a home ? 

A basic level of housing and food are essentials for us all, and for some people, whether pensioners or of working age,  all their income goes on just meeting those basic needs. One could argue that the purpose of giving everyone an annual income tax allowance is to ensure that people can earn a reasonable amount to cover those costs before having to pay income tax. 

Albermarle

tetrarch said:

I can't help with your problem, but I share your angst and anger at this brutally unfair process.

The CHC process is especially egregious as, in my experience, your father will NEVER meet the criteria for Care Home care as, (IMO) in order to actually qualify for the care the you would already be in a Nursing Care setting or in hospital. In my view the CHC is a scam, just a checklist invented to allow LA's and the NHS to justify self-funding.

It doesn't really help but you could consider the AA as a partial income tax rebate.

Regards

Tet

I would not consider myself an expert in this area.
However both my elderly in laws were discharged from hospital to home ( at a similar time ), and both received CHC funding for the rest of the time they were alive. It was used to pay for regular and overnight carers.
So not a scam, but I appreciate it can be difficult to get and success at getting it can be a bit of a lottery. I believe my OH managed to get the ward sister on side and that helped to swing it. 

NannaH

Does he have savings / a pension that he could buy an immediate needs annuity with?   That goes straight to the care home and tax will not need to be .  paid.
It’s disgusting that people who are willing and able to self fund,  have to pay tax on pension monies drawn for the sole purpose of care fees.   

I don’t know if DB pensions can be swapped for immediate needs annuity but I’m guessing not.  

Jeremy535897

The_Unready said:

But where would you draw the line on what income is excluded from income tax because it's being spent on a worthy/vital cause?

Money donated to charity, perhaps, or money to pay off debts? There would always be someone or some organisation with a seemingly valid reason for tax exemption, but the system would be impossible to manage.

Money donated to charity is tax deductible.

55ryan

Reminds me of the family I dealt with who were outraged their 102 year old Auntie was paying tax. They were back on again when she died as they couldn't accept her final payment was still taxed ie upto the date of death but the arrears were taxable.

Another one that went to an MP I dealt with. Nothing happened of course. Legislation quoted and end of the matter.

I know what the OP wants but I don't see the rules changing under any government. In an ideal world....

     

Linton

Can someone explain why income used for paying care charges should not be taxable?  As a non care home user the income I pay out on housing costs and food is taxable.