Reform of the Fair Deal Scheme
29 July 2021
You might have heard recent media commentary on the changes to the fair deal scheme. The changes are set out in the Nursing Home Support Scheme (Amendment) Act 2021. This was signed by the President on the 22nd of July and will come into effect 90 days after which by my reckoning (with a little help from …ahem . . an online date calculator) means that the new rules come into effect on the 20th of October 2021.
The main headline change relates to capping the contribution to the family farm or business to 3 years. What has not received as much attention is the requirement for a successor to be appointed and to operate the business for six years. Something that may not necessarily be in place for a lot of elderly business owners. In one sense, if the business owner had a successor, that successor surely would have been appointed prior to the last minute when the owner is going into a nursing home. Put another way, if the business owner hasn’t appointed a successor by the time they are going into a nursing home, its going to be hard to locate one at that time. On the other hand, of course, the social engineering behind the amendment is to compel succession on those who have held out to the end.
The other social utility about the family successor is that the amendments are designed to remove what was seen as a penalty on a successor. So a successor could have been appointed and was running the farm but all the time in the background the farm was being charged with the 7.5% nursing home charge. This was obviously a serious dis-incentive for successors to get involved in the family business.
If there is no successor it appears that the 3 year cap will not apply.
Another important change is that the 3 year cap on the family home now applies to the proceeds of sale of the family home. This is seen as being helpful to free up properties that are otherwise lying stagnant because owners want to keep them in the three year net.
I attach a copy of the Act here, and a good link to a summary from the government press office.