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)

That’s very good value. Dementia care is now 1800pw+ in the SE so 500k would only cover 5 years.

What the hell do our taxes pay for?

what the hell did s the goverment spending our taxes on if not social care?

My objection to an additional tax on "working people" is that those who get away with paying minimal income tax by being self-employed or setting up a limited company won't be paying it, or will only pay it on the amount that they pay themselves in wages.

People like 2 of my in-laws, who've made millions by renovating/developing and redeveloping property, got very, very rich by developing one property at a time and ensuring that one or both of them were "offcially" living there each time, thus avoiding tax. (They fucked off to live abroad when their accountant told them that the rules around their lucrative not-a-business were being tightened up and they wouldn't be able to get away with it any more, not even if they were "officially" living separately.)

It cost more like £1m, I was talking about after pensions and attendance allowance were taken off and it was a lot cheaper ten years ago. So £500k from her savings and proceeds of house sale.

Nobody knows what the proposals will be. Wait for the Casey Commission and don’t waste time projecting and fantasising!

What about people in social/council housing who have the benefit of low rent their whole lifetime, shouldn't a small proportion of their income be taxed from their earnings say .3% as they won't ever get the benefit of not having to meet rent payments as those with mortgages but think a small proportion would be fair.
Equally the very wealthy shod be made to contribute. What about those who pay tax elsewhere (thinking rishi Sundays wife type)

This

At the moment it is such a lottery as to whether or not you need to pay for care. DF had a fall, picked up an infection in hospital and died shortly afterwards with minimal care costs. DM has had to go into a home as she has Parkinsons with early stages of the accompanying dementia and her hands are clawed with arthritis so is not able to do much for herself. MIL died of cancer with all her care costs met. I can say that only one of 3 needing to pay for care is perhaps quite "lucky" but it is very clear that the whole thing is a lottery. Dementia is brutal enough on a family without having to worry if there will be enough money to keep them in a good home.

Blimey, how long have you got?

The NHS, for a start, also defence, police, prisons, motorways and major highways, courts, probation, major waterways, emergency planning, a proportion of all local govt spending via the Revenue Support Grant, the arts, health and safety at national level, museums, welfare and safety of farm animals and food production, coastguard service and probably loads more.

No, you just remove PETs at the same time as IHT so that gifts in lifetime (over a certain limit, say £10k) are also taxed at 10%. You provide no exemptions to the new tax - 10% on all estates and types of assets to avoid structuring, the only “exception” being a deferral of charges due on assets passed to a spouse until the second death.

Trusts do actually pay an alternative form of “IHT” already: a smaller charge but at regular intervals rather than on generational transfer, so that could be left in place which would actually make it more expensive to operate a trust than to pay the standard 10% charge upon death, so discourage their use.

This would be a far fairer system. At the moment many people with fairly substantial estates pay no IHT, the very wealthy pay hardly any, and the few in the middle get hammered and take steps to try to avoid it. Far better to have an unavoidable tax that isn’t really worth trying to avoid (and no loopholes to do so as it would be very simple). Everyone pay a fair contribution. Then social care isn’t a lottery of health. Also a capping of liability at 10% would mean insurance products to cover it would be affordable if people wanted to take out such insurance.

It would raise roughly £36bn so if you abolish IHT and deduct what that raises currently, the remaining funds are sufficient to cover care for everyone (not accommodation and food costs, but no country on Earth covers those as well as the care itself) and leave significant headroom (good given the ageing population so costs being likely to rise over time). The tax should be hypothecated and put into a fund so that the surplus can compound to provide a buffer to ensure the tax rate doesn’t have to be raised in future.

What would happen if you own your home as joint tenants.Would you have to sell your home to pay this if your partner died and you didn't have the funds.

How are people saying they would feel hard sone by if they didn’t use the dementia care? I’d much rather pay 10% and not have dementia, that “get my moneys worth”!

What if you care for/nurse your parents yourself. Why should you then have to pay for other people's care home costs?

Because collective responsibility is what keeps society functioning. It’s why everyone’s tax pays towards healthcare, education, etc even if you yourself don’t need it.

THe problem with this is that the generation who need care now don't pay national insurance when they retire - so yet again the workers are hammered whilst the retired generation who are creating the demand sit with their triple locked pensions. It will make resentment (or rather increase it) and it is a long term plan whereas the problem is current. The death levy is a quicker and fairer fix.

100% agree. Id pay 10% of everything I have if it bought me a guarantee I'd never get dementia.

This is wrong.

Read Dilnot.

Because one of the principles behind the way our economy works is that we pay collectively for services that benefit society as a whole, rather than pay for them individually.

Imagine how many people would die if the ambulance service wasted time working out if the injured were entitled to it free or not? Should all roads be toll roads, paid for by those who use them? Would I be able to opt out of the bit of my council tax that pays for child protection because I've never had any kids?

The money you pay towards care means you would be able to access it, too, should you need it.

Social care for the elderly needs to come from that generation, somehow.
If they are leaving a property there is no doubt they have increased their estate, sometimes by many 100% on unearned, untaxed value.

A big issue though will be if social care is free there will be an influx of families putting elders into care so whilst right now it might seem like a good idea there could be the problems of over subscribing and within a short period of time no more space.

If they work with the NHS and people are placed due to need not want it might be guarded a bit.

We know what people are like, they will bleat “I am paying 10% on my £300k house, so £30k, I am entitled to £500k care now” etc etc

It’s very complicated, but payment for elderly social care should come from that generation somehow. Or leave as is and those who need pay full amount or families look after to keep the cash.

I imagine that the tax would be deferred on the first death just as assets passing to spouses currently attract no IHT. It would actually still be a money raiser because a jointly owned property is normally ignored for care cost calculations if it is still going to be occupied by eg the other spouse.

I am sorry not getting this - so to protect inheritance for individuals if their parent needs social care then the whole country has to pay extra to make sure the children of this parent can get their inheritance? If someone needs social care their assets can not be used to pay for it and others will be subsidise them? Surely I have misunderstood?

I can’t see the sums adding up, tbh. 10% seems way too small.

I think that happens now for people who would be financed by social services as they have no assets.

Yes, of course that's what they'd tell you. You underestimate social stigma.

They pay income tax though, if they have an occupational pension. And they will have paid for the care of their predecessors all their working lives, too.

It's how the social contract works.

I’d rather not pay more tax when alive and I’d rather hand loads to government when I die as I won’t need it then

I don’t want to financially benefit from family death

and looking at the data , if we got rid of big inheritances then we could see a continuation of the rebalancing of house prices which would be good all round

if you want to give something to your kids do it now.