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LEBC calls for long-term care advice VAT exemption

Adviser firm LEBC has launched a petition calling for advice on care fees planning to be exempt from VAT.

The Government’s Social Care bill, published last year, sets out plans to cap long-term care costs at £72,000 and increase the means-test threshold from £23,250 to £118,000 from April 2016.

The bill also proposes creating a deferred payment scheme that will allow people to defer paying for care until after their deaths. The scheme will only be available to those with assets excluding their home of less than £23,250.

However, the Government has faced growing pressure from the industry and politicians to strengthen the role of advice in the bill.

In October, health minister Earl Howe agreed local authorities must “facilitate” access to regulated financial advice following an amendment tabled by Lord David Lipsey.

LEBC has now tabled a petition demanding policymakers go further by making long-term care advice VAT-exempt.

The petition says: “The cost of advice can be a deterrent for some families who need it and this was recognised by the All Party Parliamentary Group on Insurance and Finance when they met to discuss the bill on 5 June.

“To help remove this potential barrier to financial inclusion and to help ensure that appropriate advice is available to those seeking care fees planning, we asked peers and MPs to lobby the Treasury to make advice on care fees planning VAT exempt.”

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  1. Such a call is all very well but what the government really needs to do is facilitate monthly insurance plans (to spread the cost) and allow tax relief on the premiums (to demonstrate that it really does want to incentivise people or their families to make advance provision). 20% tax relief against annual premiums of, say, £200m would only amount to £40m which, by comparison with the levels of government expenditure on other projects and initiatives, is relatively small beer. Also, such a concession would surely be offset at least to some extent by tax receipts from insurance companies. It seems so straightforward.

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