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

I just finished reading Inheritocracy and had a literal note to self that said Predictions (as in what I thought night happen) - Social care tax. I think it's to do with the fact that people will find a way round IHT loopholes. What happens if property is left in trust? Is the levy still paid?

Are you including a hospice here?

I know well hundreds of people. I can count on two hands the number of those whose parents were in care homes prior to death. We are in our 50s. I would dispute that figure.

Boomers bought houses for £5k that are now worth hundreds of thousands, sometimes more. IHT is absolutely fair.

Yes
just as those who have no assets to be taxed won’t be exempt from care either

Seriously. Get over it.

You sound triggered. I didn’t mean to upset you.

I’m not a boomer, so no not triggered, lol. Sad times, huh.

Do you think that is fairer, though? My dad died in his early 50s, never retired, never needed social care (and never met his grandchildren or attended his children’s weddings and graduations) and left my mum a widow on a single income. It doesn’t make me think, “Yay, we got it all! We didn’t have to pay for his social care out of our inheritance!” Do you think it would be fairer for us to pay for social care out of my dad’s estate when he never used it, rather than people who use it and have the means to pay for it covering it themselves? And my brother and I are committed to looking after my mum ourselves as she doesn’t want to go into a home, so I have built my life and career around that plan. Should we pay for that, too?

It's mostly just chance whether people need social care at some point in their lives, just as it is whether they need health care. The current system is unfair because those who do need social care in their own home* or in a care/nursing home end up paying for it if they have the means to, whereas if they don't have the means they get it for nothing (which is right, nobody should be left without the care they need). We don't expect people to pay for their health care, so why is social care different?

*I do know that personal and nursing care in the home is provided free of charge in Scotland. We were very grateful for this when my Mum needed it. But residential care is a different story, unfortunately.

It’s no different to people paying for the disabled, or hospitals but not being as ill as the person next door, or UC when I don’t get it or people’s rent top ups

It’s not about what we personally need it’s about spreading the cost over everyone because, whilst you may not need it, whilst alive you never know.

I we had the attitude of only paying for ourselves then we would have no welfare state.
We all pay in for everyone whenever they need it and whether we do or not

I think a social care tax is fair. But the big issue is people trying to avoid it through trusts etc.

I only support it if they make it a tax everyone has to pay if they have the assets to cover it. I don't want to see people wriggling out of it.

The biggest injustice by far would be the rich avoiding it and passing the cost onto less wealthy people.

It should of course be implemented in a progressive way.

Healthy life expectancy has gone down, according to this report. https://www.bbc.co.uk/news/articles/c20q07w3gl9o

The number of years people in the UK spend in good health is falling, according to a new report.
Over the past decade healthy life expectancy (HLE) has dropped by around two years to just under 61 for both men and women.
The UK is one of only five of the richest 21 countries to see HLE decline and its fall was the second steepest.
The Health Foundation, which produced the analysis, said there was a significant economic cost to this trend and the findings should act as a watershed moment.
It said poverty, poor housing and lifestyle factors such as obesity were to blame along with the impact of the Covid pandemic.
The analysis, based on data from the Office for National Statistics between 2022-24 and 2012-2014, found those in the wealthiest 10% of areas could expect to have around 20 more years of good health than those in the poorest.
In England, Richmond in London had the highest rates of HLE at 69 for men and 70 for women.
In comparison, in Blackpool it was 51 for men and in Hartlepool it was 51 for women.
London was the only region that saw an improvement in HLE over the period.
In more than 90% of areas the HLE was now below the state pension age of 66 or 67 and in one in 10 it was below 55.
The report said this had a significant impact on the ability of people to work and said this aligns with other figures showing high numbers out of work because of ill-health.
...In comparison to HLE, the Health Foundation found that overall life expectancy had remained broadly stable.

I agree
Trusts need to be investigated
but it’s not just the wealthy doing it. It’s rife Even amongst those with modest assets ime

Perhaps making it less cost effective. If people own a property via a trust when it’s sold a cgtax of 40% and second property taxes on all those who buy properties aswell as being within a trust might deter tax/ IHT and care costs avoidance

Social care should be an insurance paid through everyone's working lives. Just like health insurance in the Netherlands.

Whilst quite obviously one of the best models in the world How popular would this be here
and with the high rate of low earners and increasing welfare costs in other areas how many would be paying enough to even make it effective

Composition of the Dutch Tax Burden
The major contributors to the country's tax revenues consist of the following: []

Personal Income Taxes (PIT): The Dutch use a progressive income tax system (Box 1) with rates spanning from 35.75% up to a maximum statutory rate of 49.5% for higher earners.

Social Security Contributions: Employers and employees both pay significant contributions (such as the Health Insurance Act or Zvw) to fund comprehensive social services.

Corporate Income Tax (CIT): Corporate profits are taxed at 19% for earnings up to €200,000, and 25.8% for profits above that threshold.

Capital Gains & Wealth (Box 3): Deemed returns on savings and investments are subject to a flat tax rate of 36%.

Also, it's likely that the amount they need to pay will need to rise. Which might be manageable in the Dutch system because they are used to it. But here it would be seen as yet another tax, and another strain on the CoL. Plus, it would take a long time to make a difference as the people most likely to need social care in the near future aren't working or are closer to retirement. So there isn't the time for us all to start paying into a fund to take out from in 60 years. Older people canf be ordered to pay 40 years back pay insurance.

The inheritance tax idea works because the people who have the most assets on average (but not liquid) are also the most likely to need social care (and less likely to be able to pay any other way). But leaving payment to happen after death means those people won't be negatively affected. And because it's spread out it doesn't negatively affect the people due to inherit in a disproportionate way either.

Also people will argue they paid NationL Insurance that should cover it. But the problem is, it doesn't by a long shot. Which then makes people think you are accusing them of not paying their way. So it's awkward.

This country has become ungovernable due to the right wing press and people's expectations and demands.

Anything that invoilves increasing taxes gets slated. We've even got the poor voting for Farage who is talking about reducing taxes on the wealthiest.

At the same time everyone is demanding more from the state. It's political illiteracy. We want better social care for the elderly but we pile on to social media up in arms when a policitian articulates how they'll increase taxes to pay for it. We all want something for nothing. It's time to grow up.

I agree to some extent, there are unlimited needs and demands being placed on the state which will only ever have limited resources to meet them.

The issue with raising taxes is that what we need more than anything else is growth. High taxation discourages growth so we just end up with an ever shrinking pie that the state is trying to take larger and larger portions from. Anyone that is wealthy and mobile will leave. Anyone stuck here will be disincentivised from undertaking any wealth creating activities when you know the tax man is taking such a huge portion. It encourages people to give up and become reliant on the state as it's easier and often not much different financially to flogging your guts out five days a week.

So growing up is realising that nothing happens in isolation. You can't just increase taxes and expect people's behaviour to stay the same and for economic growth to not be impacted. We need to cut spending and stop living beyond our means. This will mean a worsenment of living standards as we have basically been living off the credit card for a few decades expecting our kids to pay it off with presumably cripplingly high taxes.

Apparently it is one in three who will need care.

Are you including the self funders in your top line of 'total local authority adult care expenditure'?

In which case, its as as I said, the social care costs the taxpayer around 21 billion.

Yes there is a lot of unmet need and people going under the radar because their care needs are met by family and friends which I referenced earlier in the thread.

Care or a care home?

The stats are above that I set out

Around 2% of over 65s to 85s need a care home, then around 10-15% of over 85s need a care home.

So some fundamental differences with UK tax system:

• corporation tax is 6% lower encouraging investments and business
• lower earners pay considerably more tax, so they don't have situation when 10% of top earners pay 60% of all income tax
• their benefits are universal
• their welfare (UC/JSA equivalent) is time limited and linked to previous earning
• their IHT rates for children are 10% for under 150k and 20% above

What's not to love?? everyone pays in and everyone's entitled to the same support. It's not like here, were the same smallish group funds everyone else and get little in return

ETA: quoted wrong post, it was supposed to be a response to @Snoopymayhem

Except that the current system is means tested so you pay if you both 1. Need it, and 2. Can afford it. It’s free to those who can’t afford it, which is fine. I’m questioning whether it would be fairer to penalise premature death.

We can’t “spread the cost” of my dad dying at working age - my mum obviously didn’t get state funding to cover the lost income and she isn’t going to get two state pensions.

What do you mean by

’ I’m questioning whether it would be fairer to penalise premature death’