‘Dementia tax’ is back as Labour threatens your home, savings and inheritance | Personal Finance | Finance

Britons risk losing their savings, their homes and hopes of passing on an inheritance as Labour passes the buck on social care. Families facing potentially unlimited bills if a loved one needs long-term nursing home or residential care. Some could lose almost everything.

Does anybody remember the 2017 general election. Tory PM Theresa May almost threw it away by pledging to introduce a cap on social care costs. This stated that elderly people needing social care at home would have to pay themselves until their assets – including their home – reached a floor of £100,000.

The policy was slammed as a “dementia tax” and although May still beat Labour’s Jeremy Corbyn her reputation never recovered.

Now Reeves has taken a far more brutal approach without anything like the same backlash.

A new and reduced £86,000 social care cap, prepared under former Tory PM Boris Johnson, was due to come into force in October 2025. Last Monday, Reeves casually axed it to save an estimated £1billion.

Instead, families will foot the bill.

Scrapping the cap will place an immense burden on families, with nursing and residential homes charging an average of £56,056 a year, according to Laing & Buisson.

The average nursing home stay is around two years, but can be a lot longer, and now families will have to shell out until they’ve got almost nothing left.

Reeves’ solution is far worse than May’s dementia tax.

Your local authority will only offer financial support once the total value of your combined assets – including your home – falls below £23,250 in England (£50,000 in Wales).

It will only cover all of your costs once you’re down to a meagre £14,250.

These thresholds have been frozen for a decade, shrinking their value in real terms.

The idea of a cap has been floating round since the Dilnot Commission Report on Social Care was published in 2011. Reeves has now sunk it at a stroke.

So where’s the outcry?

May’s error was being too honest (and hopeless at communicating her plan).

Labour learned from her mistake and didn’t tell voters what it would do in its manifesto.

During the general election, I warned that none of the parties were talking about social care, leaving voters in the dark.

Reeves had a plan, though. She just refused to tell us.

The absence of a financial cap places an immense burden on families, said Lisa Morgan, partner in the nursing care fee recovery team at Hugh James Solicitors. “Care home prices can easily hit £8,000 to £10,000 a month, forcing people to sell their homes and ask family members for help.”

Fear of substantial care expenses will now loom over everyone in need of care, she added. “Implementing a cap on care costs is essential.”

There is no easy solution to the social care conundrum and Johnson’s cap was far from perfect.

It would only have covered social care and not the cost of food and accommodation. In practice, the average person would have paid £238,700 before reaching the cap.

Yet it was a step in the right direction, said Natasha Etherton, later life financial adviser at wealth manager Evelyn Partners. “The rapid and possible total depletion of assets is now back on the cards.”

It certainly is. Millions of families will be desperately hoping that they or a loved one don’t get dementia or Alzheimer’s.

They don’t just face the horror of losing their memories and mental capacity. Thanks to Reeves, they may also lose all the wealth they built over their lifetime.

So where’s the outrage?