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

The whole point is that everyone is included. It’s central to the idea
On the basis everyone pays into social care because wealth does not dictate that need

The problem is:

1. A lot of pensioners are asset rich, cash poor. So they can't necessarily afford regular insurance payments even if it's comparatively cheap**
2. Part of the reason it's not that expensive to take out insurance now is that insurers know part of the care costs are still subsidised by the government. The problem is as care costs rise more, that's going to be more and more unsustainable.
3. Lots of people won't pay out for insurance unless it's mandatory. There's an "it won't happen to me approach".

I think the inheritance idea is to make it mandatory to have insurance (solves problem 3) but not have pensioners need to pay it immediately (solves problem 1) meaning the state doesn't need to step in as a last resort as much (solves problem 2)

**This is also why those companies exist that help pensioners "liberate their finances" but they take a lot more than 10% and are often quite predatory.

It’s not his house if he’s not on the deeds

Yeah, I can understand people separating their finances if one person bought the home and paid all the expenses. But it's mad to put all your savings into a home you don't own. The partner could kick him out tomorrow and he'd lose everything. I'm sure she's lovely and she wouldn't but he's a fool and I would say the same if the sexes were reversed

If inheritance tax changes force people in his position to wise up then it can only be a good thing.

Yeah there's no guarantees either way.

We do need to fund this properly. Just keeping on increasing council tax - already the most regressive of them all, designed to take more from the bottom than the top, isn't the answer.

10% on the average estate gives around £18-20 billion a year, which is only a little short of the amount we need to find.

I don't understand why people should have to pay inheritance tax as our ancestors have already paid tax on their earnings? How many more times do we need to be taxed?

If the government needs to raise money how about they abolish the £115K pa every PM gets for life (yes, even Liz Truss for her disastrous 45 days). Surely, that would save money and also stop this musical chairs of taking it in turns to get on the gravy train.

It's a bit like paying school fees when state schools are available. (And then complaining you still have to pay tax for state schools).

I don't understand why people should have to pay inheritance tax as our ancestors have already paid tax on their earnings? How many more times do we need to be taxed?

Yeah every £1 on the planet has already had tax paid on it, so we should just all stop now.

It's because IHT was introduced to tax very wealthy people. Inflation and house prices meant very ordinary, non wealthy people were falling into the net and were fairly miffed about it. So they upped it to £1m. Lots of people want it to be raised again, but the country's too poor for that.

It still only affects about 4% of estates

I think all of those 4% must post on mumsnet.

There should be a law you make people do it.

Honestly it makes me laugh when poor people say this. If it wasn’t for inheritance tax you’d still be doffing your cap to the lord of the manor and paying him rent every week.

I'm sure banks will set up low interest loans for these situations.

The problem with the social care costs is not, surely, how the better off are taxed to pay for it, but that so many do not have assets / savings / pensions to pay for it?

Anyone with property pays from the sale. Anyone with a private pension or savings pays from that until £23k is left. Albeit a house cannot be sold while a spouse still lives in it - maybe the LA could put a charge on the house to the value of 50% per person in care.

Why would we want to make a law that you have to buy an insurance product that private companies profit from?

why not take the money and provide it directly?

Er, motor insurance ?

Only if you own a car. This is a insurance for being alive

Death and taxes, death and taxes ...

These already exist and for those who can’t get one because of bad credit you can borrow from the Govn
( interest is charged of course )

Never said it was his house, I said it was his home.

But if this becomes policy, it will affect pretty much all estates.

10% of everything is generous - I'm from the Netherlands where 10% is the lowest band, and the exempt band sits at around 10k Euros. Above that there are progressively increasing bands depending on the amount in the estate, a bit like UK income tax bands only more of them. We paid this on our mum's estate when she died in 2019 and were fine with it - we hadn't earned that money and we still got a nice sum each. If it raises more to fund public services in the UK, I'm for it.

Sigh.

The house belongs to her. Unmortgaged, bought from compensation for an accident. In the event of her death, it goes to the children she shares with her partner, who will obviously live in it with them if it happened when they were young. If she married him, he’ll have a claim if they split up, which is why they are not married.

Now last time I checked, five year olds can’t get mortgages, therefore their father will have to find 10% of the houses value to pay for the privilege of him and his bereaved children staying in their home.

He needs to protect himself, regardless of this hypothetical scheme which may or may not happen and which no one knows the details about yet. Why has he been "ploughing" money into an asset he has no stake in? Is your daughter financially abusive?

Either she paid for the house and it is rightfully hers. Or, as you suggested earlier, he has been putting loads of his money into the house in which case it is a little unfair he isn't on the deeds.
If he hasn't been paying a mortgage or rent and has been working then he should be able to save some money in case anything happens to her that would cover the 10%. Or they could take out a life insurance/health insurance policy. This would be sensible anyway if they have young children.
If he hasn't been working because he's been supporting the children, or has been putting all his money into their life together (rent, massive home improvements, paying bills so she can pay other things) than that brings me back to my point about he's a fool not to be on the deeds or married. Marriage wouldn't automatically mean half the house is his if they divorced, especially if she bought it outright before they were together. But a likely divorce settlement would take into account his contributions to the house after.

It's both their lives to live so it's not up to me how they live. (More commonly women put themselves into this vulnerable position and it is foolish.) But whilst it's up to them, I don't think their (not very sensible) esoteric choices re finances should have much bearing on government tax decisions.