Paying for Care Long-Term Through a Business

Today, tens of thousands of people across the UK have family members, both children and adults, who require long-term care. But, paying for care expenses adds up. While the NHS covers primary health care needs, those with chronical illnesses and disabilities need at-home or private nursing home assistance. Unfortunately, the cost of these services are high and they’re not getting any lower.

While local authorities and benefits pay for some of these services, most people have to pay for care fees. In fact, if you have UK savings higher than £23,250, you will have to use your capital to pay for yours or your loved one’s care fees. If your UK savings are below £14,250, the council will pay for basic fees but, you and your family will still have to pay any extra costs.

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Luckily, your business, or the one you work for, can cover some the costs. But, what are the implications? At Newnham & Son, we can tell you about the various options available to you to pay for costs associated with long-term care. Here are some of your options:

Options for Paying for Care Long-Term Through a Business

Covering the Fee for an Employee or Their Relative

If you work for a company, they can pay for yours or your loved one’s care costs. But, there’s a catch. This will count as an extra salary. With this in mind, it will be liable to NICs and income tax. The other option is for the business to pay the care home directly. This is a benefit-in-kind and the employer will still have to pay Class 1A NICs.

Healthcare Trusts

Some employers contribute to a trust to cover employee medical expenses. The benefit adds up to the cost of medical treatment minus any contribution that the employee makes. Under these circumstances, the money isn’t taxed or liable to NICs because the payment isn’t part of your employment contract but part of a separate medical scheme.

Business Loans

A company can offer its employees, including upper management, a loan to pay for medical expenses. Loans of up to £10,000 aren’t taxed. If the loan is larger than £10,000, you will have to pay the difference between your usual rate and the official HMRC rate of 2.5%.

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Company Insurance Policies

At the moment, there is no such thing as an insurance policy that will pay for long-term care costs funded by an employer. That said, there are policies that provide medical benefits for employees that can cover certain costs of long-term care.

Additionally, there are group permanent health insurance policies that offer income up to retirement age to a person who is sick or has a disability.

What Does the Future Hold?

As a business owner, you may want to consider whether or not care cost funding will benefit your employees. If this is something you want to provide, your best option is to offer company loans as these give the highest benefit at the lowest tax cost.

But, before you make a final choice, it’s important that you consider all your options. At N&S, we can advise you on how to setup a system whereby you offer your employees support for care costs.

Aside from highlighting the various options available, we can tell you which will benefit your employees most whilst also being most tax-efficient. If you want to find out more about paying for care via a business, contact us today. One of our friendly team members will be more than happy to run you through everything you need to know.