Management Consulting

Busy Bees, a childcare chain of nurseries, identified a significant issue regarding the financial burden of long-term care for employees as they age. The company proposed the introduction of tax-free eldercare vouchers, similar to childcare vouchers, which employees could accumulate over time to help cover long-term care costs. The concept suggested that if employees set aside £100 a week for 20 years, they could amass a fund exceeding £100,000, which could be utilized for care home fees or in-home care for themselves or elderly relatives. However, the proposal faced challenges, including restrictions on spending the vouchers only with registered care providers and potential tax implications if the funds were withdrawn for other purposes. Additionally, if an employee passed away without using the account, the funds would be subject to inheritance tax before being passed to their estate. Busy Bees actively lobbied the government to consider this initiative ahead of a consultation on social care, emphasizing the need for citizens to save for their long-term care needs with government support through tax incentives. Clare Sheridan, principal at Aon Employee Benefits, acknowledged the potential benefits of such a scheme but expressed concerns about the practicality of setting aside funds for two decades. She referenced a report indicating that the average annual cost of nursing home care in the UK was approximately £43,732, suggesting that the proposed savings might not be sufficient to cover long-term care expenses. Sheridan highlighted the need for a tax exemption to make the proposal viable, noting that previous governments had been hesitant to tackle this complex issue. The idea has been under discussion for over a decade, but without significant tax incentives, it struggles to gain traction.