What do you think of Burnham's plans re inheritance tax?

[JoyousOpalLemur]

He has said in the past that he wants to abolish inheritance tax and replaced it with a social care levy on inherited assets, which will incorporate unused pensions.

I don't totally understand this if I'm honest - I think it means everyone will be dragged into the inheritance tax threshold, but it seems like a fairer tax than what currently exists, and it's there for a purpose (to fund social care).

What do you think?

https://www.independent.co.uk/money/burnham-prime-minister-money-taxes-mortgages-bonds-stamp-duty-b3001078.html

It will be 1 in 3 soon.

I could be a problem if your spouse dies and the only money is in the house that the remaining spouse may have to sell to pay it. For example, £300k house, £30k tax to pay, no other savings or assets

We must have been lucky then as both our parents have died in the last 10 years and none needed any care

I think a 10% flat rate on all estates is a fantastic idea. Tax avoidance on huge estates is expensive, they won’t bother, they will pay the 10% and everyone will contribute something. I’ve not run the figures but I think this will net more for the treasury than the current system. And, like all the other tax we pay, it isn’t for YOUR personal benefit, it is to try and ensure a civilised, well functioning society.

10% would certainly benefit us as it means we could leave a bit more to DS by the look of it

I'm obviously late to the party on this one, I've only just heard about it on the news!!! . Anyhoo, I admit to not reading all the 20 odd pages on the thread, but do we know what the plan is if there is still a living spouse in the property?. And, is this just on assests, or is it including cash etc - so the whole estate?

I can't see how it would work. Adult child near pension age with no assets Inherits 250k property they move into, no cash assests. Where do they find 25k? Even if the government agreed they could pay over 10 years or whatever where is a pensioner on state pension going to find £200pm?

I think it is a good idea.

Too many people as they age expect the state to pay for their care but want to hold on to all their assets to pass on to their adult kids.

We have an ageing population and people will keep living longer with the constant progress in medicine so some serious changes need to be made to fund social care, popular or not.

Everyone should contribute if we want decent eldercare and social services.

''@Allseeingallknowing
Most won’t need nursing home care or residential care!''

But that's not how society or taxation works. It is not about your individual needs or wishes.

My taxes pay to maintain roads (I don't drive), fund schools (I don't have young kids) and unemployment benefits (I am working) and so on. I don't get to opt out of paying tax if something does not benefit me and that is perfectly normal.

The pil both got dementia - mil was violent and a “screamer” and doubly incontinent so there was simply no way she could be cared for at home. The pil used up nearly £700k - house, savings plus pension contributions. When fil died he had just arrived at the £23k he was allowed before funding.

Meanwhile nearly everyone else in their (very ordinary - only place which would take mil) nursing home was there for free! (Sil made official request to ascertain this.)

So a “death tax” would be fairer imo. However, there are going to have to be measures to stop people spending/giving away their assets to reduce their estate. I read that all gifts might be taxed instead of a 7-year-exemption. Which of course will add multiple new layers of expensive bureaucracy.

Why shouldn't people spend their money.

You would think 10% is low enough that people wouldn’t try & avoid it. I find it ludicrous that so many don’t want to contribute to their care.

I don't think wanting to spend your own money is trying to avoid it.

@Sesmawhy would you not save for care though? plenty already do.

Plus if it’s tied up in an house how are you going to spend it?

Provide for everyone else
Just like those who don’t have kids
Or those who don’t need expensive nhs treatment
Those who don’t need care also benefit like everyone else from more money in the counvil tax pot

The money is taken as IHT, so it’s not like they are paying up whilst alive

My spelling might be crap
but the logic still stands

Has he got shares in equity release schemes or something?

As far as I can see, this policy would simply encourage everyone with property to take out as much equity as possible and spend the bloody lot so the taxman can't get his hands on it.

But the current system presumably encourages people to spend the bloody lot so the council has to pay for their social care not them?

It's not "the taxman" it's literally needed to pay for the long term care of those people. I really don't want to fall into the trap of "all boomers are selfish" because I know that's not true. But there does seem to be a subsection of people who are absolutely gleeful about squeezing as much out of the system as possible and furious at having to pay any back. Even posthumously. Why is it so terrible for "the tax man" to take a portion after they are gone? I completely get wanting to leave as much for ones children but their children are going to be far more screwed if the entire social care system has crumbled to nothing by the time they are old and needing care themselves because their parents/grandparents deliberately burned everything down.

It’s definitely part of the problem
but
more significantly the Government doesn't pay the full cost of care for those they fund
which means those who pay for themselves are also paying for a random in the next room
We’re not talking about a few hundred a year either
Its thousands every year

Whilst the new proposals still mean those who have Nothing don’t pay
at least those who do aren’t subsidising others extortionate amounts just because they are in the same care home

The new proposal means everyone who can pays. Just like everyone who earns over the threshold pays
tax into a system they also may not use to the same amount as others

It doesn’t generate enough money and still puts the burden on our council taxes
Thats why we have the current problem
Everyone paying in that has assetts generates more money

The current Burnham ‘idea’ is such that the IHT @10% is taken after the spouse dies
Not after just one of them dies
I think the policy was posted upthread

They will be dead
no one’s taking their money whilst they are alive

If they inherit they need to pay
Just like the current system

The proposal in this regard is the same as the current system
ie
IHT liable on death of remaining spouse

Way too logical!

Deprivation of assetts
When people are currently assessed for IHT the Govn check to see if you’ve given money away to avoid the tax
It happens now to people, it’s no different.
Nothing will change, everyone will be checked the same