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

So everyone will pay rather than just the more well off, haven't done the sums but will this mean the rich pay less

So it starts at 10% but then just gives an excuse to raise it once the policy has been put in place .

I would argue the inheritance tax threshold/amount needs to stay the same for the rich as there are other things we need money for. But the 10% rate would fund social care which is currently an elephant in the room.

If there’s a 10% on all estates, would this stop the unfairness of those privately funding their care being charged higher rates than those being paid by the local authority.

What happened to the 2024 Labour manifesto that convince the country (alledgedly) to vote for labour.

Has that been thrown in the bin and has Starmer started afresh as will the next PM? A new Election is needed

this- utterly bizarre to be so sidetracked by this situation which has loads of solutions when we’re talking about national, long term policy.

Me too. We still need inheritance tax as it is, for general spending. This should be to take the heat off self funders and councils and by extension council taxation.

I agree with this - I will potentially have a large inheritance and we have done various things to avoid IHT (large gifts, signing property over to me). If it was just 10% and everyone had to pay it, we probably wouldn’t have bothered and the tax man would have gathered about £200,000 from us. As it currently stands, he’ll get zero.

I’m aware
but if he’s not on the deeds, as I’m sure you know, then it’s a tax on your daughter estate

It's the same situation for people in this situation now ( except obviously only relevant if their estate exceeds £500k )

Yes
because everyone is paying in the same % of their assetts
How much they are worth won’t need assessing, the money is coming from all of society

Agree
People would stop signing over property to their kids too to avoid care home fees and IHT

With this policy it would cost more as capital gains tax exceeds this 10% standing at 18 and 28% ( assuming non residence of course )

Yup, I’m very aware of that. Except, the house is no where near worth enough for inheritance tax, so as it stands, it would be irrelevant.

10% on everything then 40% for everything over £500k ( assuming passing on to kids )
Means a 50% IHT for some
in which case people will continue to give everything away to avoid it completely and not even pay that 10%

The pot will be smaller

@Aposterhasnonamehow much is the house worth? If her assets are worth more than £500k (including pension soon) the kids would be paying IHT at 40%.

If they can’t afford it they would have to pay it off across ten years with interest added by HMRC.

10% would be a bargain in comparison. That said, I agree that I can’t see the Labour Party removing the 40% threshold to replace with a universal 10%. They will just have lots of us paying 50%.

I dont think the numbers add up

Around 10 billion is spent on social care for adults under 64
Around 11 billion is spent on social care for the elderly over 65

If the idea is that social care is free for all, that would then cost a great deal more because those groups above dont include those that are self funding/paying privately
It also doesnt include those who are getting 'free' care from friends and family

If all of those groups then want free social care and are entitled to it, how much would that cost on top of the 20 billion we already pay?

Agree
but the thread is about Burnhams alternate tax
and as I said
its no different from what some people already experience. It’s not new

The house is worth vastly less than that. Not even close.

One big problem with the idea of a flat 10% is that the amount needed for social care would increase so much. People who, at the moment, make decent provisions for their care might think “well I’m paying for it anyway” and not bother to make provisions, increasing the overall cost.

This is what Burnham said a short while ago ( Can’t remember as just kerp this screen shot ). It was in the Times

"It's not about asking people to pay more, it's just people paying in the most unfair way possible at this moment in time and I think there's a much better way of doing it, and people just have peace of mind while they're alive, because they get the care that they need, and then it will be dealt with in a much better way."

He added: "Our hospitals are full of people who are medically fit to be at home or in a care home, but can't be discharged. The cost of that to the NHS, in my view, is getting bigger than the cost of fixing social care. Actually, the NHS is almost being overwhelmed by a broken care system."

lan Cook from the wealth manager Quilter said abolishing inheritance tax would prove popular in principle but that would depend on the taxes that replaced it.

He said: "A flat 10 per cent charge on all estates would be something many people would be very open to. But unfortunately it sounds too good to be true.

"We are seeing so many people worried about pensions becoming liable for inheritance tax next year. There are lots now who have modest estates and just a couple of thousand pounds in savings who are now ripe for inheritance tax. But the system was never originally designed for those people."

Or it might be opposite - why am I working hard and saving to get the same care in the same carehome as someone who didn't work a day in life but will be funded by my taxes? and whatever's left in my estate (assuming I own a modest house in SE which is over 500k) my DC will pay 40% on it? screw it, I'll stop working much earlier and will sign it all over to kids. If I don't have enough the state will pick up the tab.

ETA: that was my decision after Labour included pensions in estate. So taxman lost considerably more from me. If it was flat 10% on the entire estate they'd get much more from me.

Currently self funders pay £8 billion. Councils pay around £12 billion. Anything that raised £20 billion would cover the lot.

At the moment there is a big disincentive to save for people whose total assets are around the £100-200k mark. The cost of self funding is proportionally huge for them - it can cost them between 50-75% of what they've amassed throughout life. Kind of puts the iht gripes into perspective.

The way things are now you either need lots of money or none at all. Hopefully this would address that.

If, and it’s a big if, this comes in, it could be a really good move for Labour? The squeezed middle wouldn’t feel so persecuted, the extremely rich wouldn’t need to hide anything and would probably end up paying more, those who can’t work and don’t have an estate wouldn’t pay anything but everyone who could would pay something and we would get decent provision for all?

@JoyousOpalLemur

I feel that you may be team Burnham's policies research.

He should move heaven and earth to undo some of the awful Keir nonsense. Lower employer national insurance and help companies be able to get rid of rubbish staff.

PS: sort out the civil service and reduce those gold plated pensions. Cap their pensions please.

I think people really struggle to comprehend that most of us are living in houses that are way way way cheaper than the IHT threshold!!

Like your daughter, Im savvy enough to have bought this house myself, my parnter owns a very small percentage as a tenant in common with me.

We are not married, no way would I risk my financial security for that

He wont need to worry about IHT and neither will I.

Care packages for adults over 18 total over 20 billion, not 12.