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

Havent read all the comments but an administrative nightmare if you include all estates, even the one's leaving hardly more than funeral expenses (and will they be allowed first or the money for that also charged at 10%)? Would cost more to administer than you'd get so there would need to be some threshold.

Maybe it will work a little like cgtax

You fill out the Govn online forms use the Govn online calcs
and submit everything with the payment

They they do random checks for compliance

Yes - because that is your decision to base your life around caring for your mum.
i didn’t work for ten years when my children were small. It has impacted my pension etc. and obviously during that time our income was massively reduced.

It’s a choice to do so for whatever reason. For us we had a very sick DC, no employer would have been prepared for the amount of parental leave I would need to be with them in hospital so I stayed home. Should I be compensated for not claiming benefits then?

As in is it fairer for the estates of those who die younger to pay for the care of those who live longer and, importantly, who can afford to pay for their own care? Given the costs and loss of income that come with losing someone young?

If you die younger, you already don’t collect your state pension, on top of not needing elderly care. Your family may be losing a breadwinner and it’s not the easiest thing to deal with. You will also likely have a smaller estate. I’m not sure if it’s fairer to tax this group more to cover the elderly care of people who can already afford it.

The post I was originally quoting said something about the problem with the current system being that, when leaving everything to your children, you could die at a healthy 65 and they get everything, or you could live longer and your assets get spent on care. In my view, dying young isn’t exactly a big win and I’d be absolutely thrilled if my parents lived long enough for their house to be sold to pay for care.

But we’re not asking to be compensated, we would actually be saving the state money if my mother needed care. It’s also other people’s decision not to look after their own relatives, so why would we pay for that when they can afford it? It’s currently means tested so you do only pay it if you can afford it.

We are also not asking to be paid back for supporting our mum financially after our dad died because she could have sold her house and rented somewhere cheaper, I just don’t think it would be fairer for us to pay for those who live longer and can afford their own care but just don’t want to pay for it themselves.

That was me
Dying young definitely isn't a big win. Never needing the NHS but getting hit by a car on your 40th birthday isn't either. In the second example you've "lost out" because you paid for care you never needed. But because health is so random and it's hard to pick the future the current system is like a lottery. Most people resist inheritance tax because they want to leave something behind for their children. My point is this is the easiest way to insure against losing it all if that's the concern. And usually it's not the children thinking like that it's the parents. And if you've ever had to fight with a struggling older person who has the money to pay for additional help they clearly need but won't because they want to save it all "for the grandkids" you'll know what I mean.

Arguably the biggest "win" of all would be living to a ripe old age of 90 with a good quality of life and dying in your sleep. In which case you would never be paid out for the money you put into the NHS and Social Care. That could be me. But I could also fall ill tomorrow and need expensive healthcare for the rest of my life. Noone knows. So I'm happy to take the "risk" of paying in money to the NHS.

None of my grandparents made it past 60 - my parents are still going in their 80’s. Some people don’t have kids - should they not pay the bit of tax for schools?
some are incredibly healthy - others have a season ticket to the GP.
my view is - every estate pays a percentage- sliding scale etc.

LA’s are crippled by paying for ASC. Were care funded centrally and correctly local authorities would have money for all the things they’ve had to cut. No shade being thrown at old people here by the way - they can be expensive to look after, their numbers are increasing and not decreasing.

we need a societal change where everyone pays - unbegrudgingly or we’ll continue with the spiral of bankrupt councils and poor services for everyone. So some can keep hold of granny’s bungalow.

People can afford to pay for education and private healthcare but the state with taxes provides for everyone and they are not required to pay for either
Why then is care in ones older years any different

the welfare state is there for everyone

Well technically in Burnhams system granny can keep hold of her bungalow if she’s in care
Its only when she passes they get the 10%
because she will not be forced to sell, unlike the current system

The NHS is not means tested, care costs are.

If I didn’t know what would happen with my parents, I would more than happily agree to inherit £0.00 if my parents lived to be elderly and got all the care they needed, and would want to inherit as much as possible if they died young with small estates and while they were still our providers.

Because relatively few people pay for private education or healthcare even if they can afford it. You aren't forced to use either just because technically you can afford it. This is a crucial difference. Lots of old people would happily be cared for by the state and wouldn't choose to pay for care. They are forced to pay by the government who then would take 10% from the remainder if your estate to fund everyone else's card.

You can't expect people to pay unbegrudgingly for other people's care when they are expected to fund their own care. This is especially true when you have tried to be sensible and frugal with your money and you see others doing the opposite and then benefiting from free care that you've essentially funded for them on top of funding your own care.

I mean - that’s basically society isn’t it? Anyone leaving money (much of which will have come from property values increasing I would imagine) pays tax to fund social care - similar to the NHS. So just like ‘some going private for healthcare’ you could still do that if you wanted.

But when you’re dead (so you can’t do much with it anyway) a tax on your estate feels fair to ensure your grandchildren’s grandchildren are not growing up in a society with no play equipment in parks, terrible schools etc. let local authorities fund nice to haves for everyone - while dead people fund social care for all.

At the moment most adults do pay towards social care - through the community charge. The longer you live (and therefore the more likely you are to need care) the more you pay towards it. If you have a bigger property you pay more, even if it's not as much more as it could be. Taking money from people who die young or leave little more than their funeral costs is taking from the poor to give more to the rich.

No, it's not like private healthcare because private healthcare is optional. Paying for elderly care isn't optional if you are found to have money. It is completely incomparable funding NHS or state education. Which we all have equal access to through taxation. You are asking people to fund something that they have no access to themselves.

Many have a problem with this as it basically encourages pretty reckless financial behaviour. This will especially be true as more people with children begin to age and they realise you might as well spend all your money having a great time and then get the state to fund your care.

What’s the community charge? Do you mean council tax? Have you looked at the price laid by the lowest band vs what’s paid by the highest? Where I live in the borough the cheapest flat can be about 50k. The other end of the borough the houses are in excess of £30m. The person on the lowest council tax band pays 1.5k a year. Mr Footballer at the other end - with a £30m house. He pays just three times more…
do you think that’s fair?

So everyone wants better services, but not for all - and they want someone else to fund it. Cool.

That's the point of the (suggested) change though...
Instead of means testing care (which can mean selling thenfamily home at worst) the care costs are spread evenly and paid for by inheritance. So you don't have the resentment from people who saved versus those who didn't. It doesn't cost already struggling councils and increasing amount each year. It doesn't hurt the older people because the money's taken after their death. It doesn't disproportionately affect their children because the load is spread. If someone (as in you example) dies well before retirement with very little saved then they won't be penalised for this because they won't have an inheritance anyway.
It's not perfect but it's the least problematic way to deal with something very fraught

Choice say u have a 250k home risk not having to go into a home late in life with dementia or cancer or some life deteriorating illness and your family gets your home or the care home which cost about 50k a yrs takes it all if your in there for 5 yrs with say dementia.
Give your heads a wobble if u think 10% is worse than the above

The point of my post was in responce to the idea that if you can afford to pay out of your own funds you should have to
Hence I gave the example of education etc

The amount that’s taken from our council taxes isn’t enough though
That’s why some people are self funding and partially funding those that are paid for through the council
The council don’t pay enough
Councils are broke with the cost

So we need another model that works for everyone that needs it or has the potential to need it, paid for by society for the good of all society
The only people that won’t be paying in are those with no assets when they die

Hence this IHT idea by Burnham
as an aside. It will free up counvil money for other services which most councils are desperately in need of.

That’s a separate issue though and one that should also be addressed

I could also say
A 2 bed flat with three people should pay the same as a four bed with three people.

They are using the same services
But that’s a side issue and I’m not getting into poll tax discussions 🤣

Burnham is making proposals for a change in the way council tax might be calculated

re your last para
10% is Nothing like the money your could lose though
so people are less likely to spend it all to avoid it. Especially as everyone is financially supporting it.

So you realise now how those pesky high earners feel? those who pay 62% income tax whilst being denied free childcare hours? Unfortunately we don't all have equal access. Do you know that private school kids can't access certain OT services because they are only provided via state schools?

Those who made all right choices, saved hard hoping to leave something to their children but now having to pay for their care whilst being in the same carehome as someone fully LA funded?

The difference is that current IHT is 40% on everything above 500k. Folk were happy with this because is only 4-5% estates, so tax the rich. Now, when there is a chance they have to pay as well, oh it's unfaaair.

If there was a true replacement of IHT with a flat 10% on all estates with no nil band I'd be all up for it. Unfortunately I can't see Labour doing this. But it's a great idea, and I hope the next government will implement it

Agree

but of note councils do not pay the full amount for council care home occupants. Private occupants pay a huge amount extra topping their fees up.

heres a basic study by one organisation. They all report much the same though varying by region

Private self-funders typically pay (30 -50% ) more than council-funded residents.
While council-funded rates generally range
from £500 to £900 per week,

private self-funders pay an average of £1,200 to £1,500 per week for residential care

Then this from another report

Average weekly costs for care in England vary by both the type of care and the payer: