AIBU to think a 10% inheritance levy for social care is fairer?

I also think this is a fair proposal. We will still see it avoided by the most wealthy who will put their property into trust to remove their ownership before death and to avoid the levy.

Would this be on top of the current inheritance tax (for those who meet the threshold).

It’s sounds brilliant to me. The trouble tends to be that people with really significant assets will continue to find it worthwhile to hide their assets from that tax and solve only the moderately wealthy to carry the cost ?

or can we assume that the royal family will be first in the queue to volunteer to pay?

I don't think his 10% death tax will be instead of paying for care. I think he's thinking you pay for your care and whatever is left (if anything) he'll take 10%.

At the moment the majority don't pay inheritance tax because the estate is under the threshold to have to pay. I think the proposal is no estate would be too small for Burnham to want to take a cut, he'll be taking 10% of your garden shed if that's all you have left.

You would have to be in care for an awfully long time to get through £350K.

My MIL was in care home for nearly 5 years and the net cost to her factoring in State Pension, Private Pension plus interest on savings from selling her home was around £100k.

Personally I think the person requiring care should pay for it but the cost of provding care should be heavily regulated.

Also, if all care is free, who gets the the nice posh care home and who gets the one that smells of cabbage?

If someone works their whole life and invests
their money into a property then in their old age they need care (often) because their offspring are nowhere to be seen, why should the wealth they accumulated not be spent on their care? The older generation who enjoyed all sorts of financial perks throughout their generation will drain this one dry, so our children will never buy a home and can’t get a council one, can barely get a job, will be lucky if there’s a state pension and we want to make sure we still cash in at the end? Older people aren’t entitled to care if they can afford it-and their offspring are not entitled to inherit, what’s left to inherit comes after the fact. It’s perfectly fair.

I think it’s a great idea. 10% across the board, fairer for everyone, everyone contributes, the extremely wealthy won’t bother to set up trusts etc, they’ll pay the 10% and it will net a lot more for the treasury than the current system. It won’t happen though because it doesn’t meet the current “tax the rich” mantra.

Whilst that sounds great the devil is in the detail and it wont work because it wont raise enough money, will reduce death taxes for the top 5% of UK residents whilst increasing it for everyone else. The article below explains the figures (gift token link)
https://www.telegraph.co.uk/gift/31bcaef4c640447c

Personally I'd rather my parents house was sold to pay for any care they need than have someone who leaves an estate (including any pension pots) of over about £6500 be left unable to pay for a decent funeral even if they dont need any care.
Honestly why should I receive 90% of the value of my parents home instead of paying for their care from it when it means Joe blinds a working class person has worked his whole life paying into the system has zero care costs for himself has to pay 10% of his megar savings towards my parents care costs?
Sorry but that just doesn't seem fair to me as someone who would spectacularly profit from this

Assuming this replaces inheritance tax the tax take would increase. A lot of ultra rich people I know set up elaborate trusts to avoid 40% tax and plain rich people give a lot of money away. Everyone I’ve spoken to said they’d happily pay a flat 10% and would abandon plans to avoid IHT . So yes, I think it’s a good idea from the perspective of someone whose estate will be liable for IHT if I die tomorrow.

I would personally prefer all estates regardless of size pay a smaller “death tax” if that means we have the funds to provide social care to those who need it.

As it stands person A may die of cancer over a couple of years, have no help from relatives, and be primarily in a hospital/hospice for the times they need care costing just as much as person B who suffers from dementia and, even with care from relatives, requires 3-4 years in a care home at end of life.

In that scenario person A can leave their full life savings to their family while person B may be able to leave nothing (depending on size of their estate).

If it was the case everyone had to refund the net costs to the state of all their health and social care out of their life savings before anything could be left to children then while that would still be subjectively unfair it would at least be consistent. The current set up differs wildly based broadly on what you ultimately become ill with and die of and I’d say that is objectively an unfair way of managing things.

I think in theory it’s good but in practice people will just offload wealth before they die . You’ll also get people upset to pay if their parents don’t need care yet others who do don’t pay anything . What else can he do though , the system isn’t working now so this option if it works means at least people know what their commitments are .

I agree. There is an unfairness in the system at the moment. If you get dementia your care is deemed social care rather than medical and therefore you have to pay. It’s particular bad for those with early onset dementia as they can live for years. The very elderly who develop dementia tend to die of other conditions so don’t last as long.

I really like the fairness of a straight 10% across all of society.

I don’t believe he’d actually do this though. I think he’d introduce 10% for under £325 and an additional 10% for those over.

I disagree. Many years ago two same sized families move house. Same income, same area. One gets a housing association property, the other decides to get a mortgage. The family who rent have more disposable income (that was the case when interest rates were 8-15%) and have holidays abroad, change their car quite often etc. The family with the mortgage have to save for repairs, drive an old car, and have the odd week in a caravan.

Fast forward to later life, the surviving adult in the rented property has few savings, has downsized to a council bungalow, gets Pension Credit, and has the rent paid by housing benefit. The surviving adult in the bought house, is still there, and with a similar income and savings, also gets pension credit. They have similar disposable incomes, although the homeowner still has to pay for any repairs.

They move into the same care home. The homeowner, who has lived a less lavish lifestyle to initially pay for their very similar home has to pay far more than the renter. They pay until the money from their home runs out. One spent as they went, and gets everything free; one was frugal, and gets penalised. Of course there are those who through ill health, marriage breakdown etc couldn’t buy a house, or save much, and their care needs must be met.

I’m in favour of the 10%. I just think it’s fairer.

If it was just a flat 10% I think it’s a great idea. My parents have done quite a bit to avoid IHT on their reasonably substantial assets, but if it was 10% I would have told them not to bother as I’d be perfectly happy to contribute 10%.
As it is at the moment, the govt will get pretty much nothing from my parents estate because they wanted to avoid paying around £400,000 in tax, but if it was £200,000 and the knowledge that care was paid for, that would be a good financial outcome.

I doubt he’ll do anything reasonable though because so many Labour policies seem to be entirely motivated by punishing the wealthy rather than what will actually gather more money. So they’ll lose out as the wealthy will continue to use legal measures to avoid it.

One obvious point is that Estates are not subject to Capital Gains Tax so most are sitting on massive Capital Gains that are untaxed on death.

Secondly the real issue is massive House Price Inflation, if you go back to the era when average house prices were about 3x earnings firstly most people could afford to buy from their own income and savings and the real value of most peoples inheritance was not as significant to their life chances as it is now.

I also think a 10% tax on everyone might help to make everyone feel more like it’s a collective cost being paid collectively & maybe that helps build up a bit of a sense of community about it, which is sorely lacking at the moment. As to the argument people might just pass it on early or spend it themselves I’d argue that’s good too - in a huge number of cases doing that will lead to 20% vat, extra people being employed and paying Tax/NI, bigger profits so some take from corporation tax.

My OH used to work in tax planning for high net worth individuals and generally the consensus at his place of work was if clients would only lose 10-20% then they wouldn’t bother trying to get around it. If you hit the right percentage you’d increase the overall tax take & by doing it with a death tax you don’t squeeze income, which is a huge issue for most people at the moment with cost of living increases.

No one likes paying tax but if you have to then paying it when you are dead and leaving your children/grandchildren/the local dog shelter a bit less seems preferable to raising income taxes.

I think it is the least worse solution to the problem. Why do people that happen to get dementia lose their home while someone that happens to get cancer, don't? Awful to say but it is true. Both incur huge costs.

In my DM’s case it would have cost quite a bit less than fees for very nearly 8 years in her care home.

Adult social care can easily be sorted by sorting out the extremely wasteful nhs

but no government is prepared to do that due to the unions so money will continue to be thrown into that black hole

Agree - my dad recently died of cancer and my mum had loads of free help from MacMillan (she also paid for night nurses herself) which she didn’t even really ask for - they just rallied round, organised by the GP/ECHO. Yes, there was a time limit on it (they only started once he was clearly in his last weeks) but the point is still there that cancer care is paid for and yet arguably people with dementia need more care and it’s still an illness. It’s not like they’re “just” old.

IHT at 10% across the board. Seems fair