AIBU to think a 10% inheritance levy for social care is fairer?

[TourdeCrema]

So Andy Burnham is looking at a 10% death tax across the board instead of the system we now have, where social care may wipe out your entire inheritance and you don’t get a penny.

paying for everyone’s social care through the death tax

so if you leave £350k house and your parent had 5 years of care, you sell the house and pay £35k to the government and keep the remaining £315k.
presently you’d walk away with £0 as the social care would take the house cost

i think this is a much more reasonable suggestion, than walking away without a penny if my parent needed care( both my parents are dead, so it won’t affect me now)

I think a ringfenced care fund levy and an inheritance tax is fair. Say 10% over everything over £10k for care, as tiny amounts would probably cost more to administer than they would bring in. Then an additional 10% on everything over £200k or £500k for the general tax pot. The care fund must not be raided of there is a surplus, as we also need to consider the declining birth rate

I don’t understand where the money would come from, to pay the care home fees, if people only had to pay a small proportion of it.

My Mum is 86, and owns her house which is worth about £300k. If she went into a care home now, I’d sell her house, and the £300k would cover her fees for a few years. Under this new rule, she’d only pay £30k, and the state would cover the rest. Is that right? Where would the government find the money? Am I missing something?

I don’t consider myself privileged or wealthy.

I will likely have an inheritance from parents who started with nothing and worked damned hard. My dad worked full time and then evenings 18.30 until midnight and after 3-4 nights a week, mum full time.

I hopefully will also have money to leave to my children. I have an unbroken contract of 35 years, in public service. Long hours, limited time, at times, at home. I’ve bought a run down house and renovated, I have spent carefully (no flash holidays or new cars, no debt apart from a mortgage). I have worked so hard (as do my children).

It is a good idea but I’ve also read that another prposal is a new, extra national insurance/tax on working people - a ‘social care levy’. I think, in reality, this is the route the government will go down as it is the path of least resistance. I think it was proposed as an additional 1.8% from people’s salaries. However, this does not take into account what will happen as informal care is converted into formal care. So, the additional working person’s tax could easily be double this.

You will leave 90% of it to your children. Why isn't that enough? It's entirely un-earned wealth for them.

In this country we are obsessed with taxing earnings and not wealth! That's much worse for your children across their lifetimes.

I've lost two parents this year and neither left anything but debt. Not everyone has an inheritance. Those of us who came from absolute poverty do see inheritance as a privilege. Those nurses/public sector workers don't get to pass their pensions on - unlike people who worked for the private sector!

Our chance of needing a care home when we are old is roughly a third. Most people don't need one. Even then, the average time spent in a care home is about 1-2 years. The average care home costs £65kish a year.

I think the figures could work at a population level.

But wouldn't you rather your children paid less tax on their (hard-earned) earnings, rather than more tax on un-earned wealth? That's so much better over a lifetime!

I suspect the 10% will be for estates that are not big enough to be captured in the current 40%/7yr rule.

Personally I have no desire to end my days in any sort of care, state funded or otherwise and wish they would approve the Assisted Dying Bill!

An elderly relative recently died after ten years in a dementia care home. It cost well over £500k after you take pension and attendance allowance off.

It is a gamble, vote for 10% and get 90% or take the gamble of paying out 100%.

He will be including many who currently pay no IHT to start paying 10% of an estate. So those previously exempt will now have to pay it.
Rich people already avoid paying. And probably will continue to. Unless he does something to stop that. Which I doubt.

My family, our friends, all have trusts set up, 7 year loop holes etc exhausted, to protect assets from the death tax. I would be happy to pay 10% in full.

If the rate of IHT dropped then the business case for estate planning decreases.

Perhaps. Although I would not bank on it.

But the point is that dementia on its own doesn’t NEED medical care, just ‘social’ care, as per my pp above.

But would you rather the risk of needing care and nearly all your assets paying for it, leaving only 23k to your children; your children (and everybody else's children) paying 2p extra income tax to fund it; or taxing everyone's estate at 10% leaving 90% to your children and not paying care if needed?

Yes but i think the risk of social care should be socialised in the same way the risk of medical care is socialised. Either way thd person ends up dead without it. I dont especially get the distinction.

Its like education and healthcare get very intertwined with some sen childfen and the distinction ends up being false for arguments about who pays.

And anyone that has relied on others all their lives and have no assets still won’t be contributors. So the contributors will still be paying for themselves and the non self funding patients to make up for the shortfall created by LA not paying full care home fees. In some cases you are paying 50% more to subsidise the care of the person in the next room.

There is no cure for dementia anyway, which is not the case for many physical diseases.

Tax avoidance is always pretty risky and can be very expensive when you need to start getting lawyers involved. Currently someone with an estate worth £1 million will pay £250k in IHT. That is an awful lot of money to pay, especially if you've already funded your own care costs. If this was just £100k and you could get your care costs funded by the state then I think far less people would have a problem with this.

Do we know if it’s going to be an either or though?

Would that person be paying £250k on IH and a further £100k on a social care tax?

I think most proposals are about replacing IHT though. This would be unbelievably expensive for those liable to pay IHT if not as there wouldn't be a NRB for the Social Care Levy. So the £1 million estate would end up paying £350k. That is crazy!

It would make sense if it does replace IHT! Its rate that taxes are taken away though.

Someone with one million would be self funding. And not have state funded social care.

Id argue that my relative did need medical care with advanced dementia. I suppose it depends how you define medical. Maybe we should charge for some medical care to make it fair, if you are in hospital is someone changing your incontinence pad medical when it isn't for dementia, or help with nutrition for someone who can't swallow, using hoists as they can't move independently. Should all those things be charged for everyone not just dementia sufferers. Why are they medical for some conditions but social for others.

I think the social care levy would mean all care is state funded?