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Enabling people with disabilities to live independently and decide on their own care is an important government policy. But for it to work, the tax implications need government consideration.

Introduction

LITRG has highlighted the tax implications aspects of the individual budget approach in its response to a recent call for evidence on care and support strategy.

The consultation

In December 2010, the Commission on Funding on Care and Support (the Dilnot Commission) asked for suggestions and evidence submissions on the future funding of care and support in England.

Following on from the work in its 2008 report, Independent living, direct payments and the tax system, and subsequent submissions, LITRG responded by flagging up issues it had previously identified and been doing further work on.

Tax issues can arise for a disabled person arranging their own care or making adjustments which allow them to live independently. For example, those in receipt of direct payments can become employers of those caring for them or helping them to living independently.

Furthermore, the sometimes peculiar workings of the VAT system of reliefs for disabled people can have unexpected cost impacts, for example when paying for home adaptations. The LITRG’s 2007 report, VAT and disabled people – the case for removing the barriers, gives more detail about the problems.

Our response to the call for evidence points out that whilst we believe there are undoubted benefits to recipients of personal budgets, and within them direct payments, they are often lessened by the burden of responsibilities that using these payments brings to them. Addressing these issues could lighten the burden, increase take up and also ensure that better use is made of available funding.

In designing the future of care and support and create a successful system, it is therefore essential to consider these issues at the outset and ensure that sufficient support is available to the end users.

Read the full LITRG response at:
Commission on Funding of Care and Support: Call for Evidence - LITRG response