Why is tariff income so high?

Tariff income is the amount a person is required to contribute towards their care costs when they are supported by their local authority and they have savings between the lower support threshold of £14,250 and the upper support threshold of £23,250.

The amount payable is £1 per week for every £250 of savings so with capital of £23,250, tariff income is calculated at £36 per week.

In our view, the way in which tariff income is calculated has always been extremely harsh.

The requirement to make a contribution of £36 per week, because of assessable savings of £9,000 assumes an interest rate of 20.8%

Clearly this is way above the rate of interest paid by banks, which is typically less than 1% and so tariff income will result in savings being eroded.