The “true” cost of care

It goes without saying that when a relative becomes ill, we do our best to step in and look after them. However, when that illness becomes more long term, the costs of caring for that individual can soon mount up.

Things like time off work or travel expenses are some of the common costs associated with caring for someone, but, it’s the more hidden cost that can take its toll. If you choose not to have a live-in carer or personal assistant, chances are we end up picking up most of the day to day tasks including dressing, buying groceries or collecting medications.

For those individuals who do have live-in care, you would become an employer in the eyes of the law. You'll need to register yourself as an employer with HMRC and set up a payroll, as well as set up things like employer's liability insurance and public liability insurance if you employ a person to work in the home, so that you’re covered if your employee has an accident. Your policy will need to cover you for at least £5,000,000 and come from an authorised insurer.

Your employee will also have certain legal rights. This will include a legally drawn up agreement document or contract and they will need to be paid at least the minimum wage – but if the needs of the individual are much greater, it could be as much as £80,000 a year. It is possible, however, to count the value of their accommodation as part of their wage.

As an employee, carers will also be entitled to things like rest breaks, maternity pay, sick and holiday pay, a pension and any redundancy pay. If you source a carer yourself, as opposed to through an agency, you will also be responsible for paying their tax and insurance. These are all things to consider when it comes to calculating the cost of care, and it’s amazing how quickly it mounts up.

You could find help in the form of a local authority, who can step in to pay for care if your relative has savings in the bank of less than £23,250 and they do not own their own property. If they qualify for either all or part of the care costs, the council may provide care services themselves. If they do not qualify, then they will need to fund their own care. In which case, there are a couple of options you might want to consider:

• Selling their property – although they won’t need to do this to pay for care in their own property, they may need to do so if they go into residential care – unless their partner continues to live in the property.
• Renting out their property or releasing equity from their home.
• Asking for financial support from the family (your family's finances won't be taken into account when you are means-tested)

Remember, these are complex financial decisions that you and your relatives could later regret so you may want to seek independent financial advice. You can also speak to our professional team of lawyers at Downs Solicitors for more information.