Income

This is a charge that can be levied on all forms of income.  Earnings, Unemployment Benefits, Disability Benefits, Retirement pensions can all be taken into account.    For the purposes of the calculation all income from Housing Benefit and Council Tax Benefit are taken into account.  A financial assessment is carried out by each local authority on each person assessed for services.

Many local authorities will insist that every person who receives social care takes additional help to claim and maximise any income related benefits that they may be entitled to.  This is done in order to increase the amount of income of person has so that they pay  more Care Tax.

Savings

Savings whether they have already have income tax paid on them or are invested in Tax free plans such as ISAs are treated as having a notional income.   Savings are divided into 3 bands.  

1.The first band is an amount that is treated as being completely disregarded.  This can be as low as £6,000 in Midlothian up to £14,500 in Dumfries & Galloway.  This amount is not included in the income calculation and will not be used to contribute to the Care Tax.  

2.Savings between the disregarded limit and a local maximum is treated as generating income at between 10% and 20% per annum.  Such interest rates are between 5 and 10 times as much as can be gained in the Best Buy savings accounts in 2013.  The result is a net depletion of savings in this intermediate band.  The higher 20% income assumption is applied in councils such as Glasgow City, North Ayrshire, South Lanarkshire and 5 other council areas.  

The local maximum can vary from as low as 12,000 up to £23,500 while yet more councils treat all savings above the minimum as generating income at the set interest rate.  Despite the Wonga type interest levels, having a high or infinite maximum can allow savers to use their savings for other choices in their lives.  Whether this is additional respite breaks or superior aids and adaptions, many benefit from the flexibility.  

3.   Where there is a local maximum level for savings, then all savings above that maximum level are treated as available income.  That means people must pay the full cost of their social care services until their savings fall to the maximum level.    As a result in East Lothian, someone with £25,000 of savings would probably have to pay the first £9,000 of their social care costs before it was assessed on their income.  In Edinburgh, the same person would probably only have to pay £1,500.  And in Highland, that person would be able to benefit from an income assessment from the start as there is no savings maximum.