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)

£100 billion is annually passing down inheritance presently

£5.5 trillion in the next 30 years

Yes - but they wouldn't be paying any new additional NI social care surcharge - despite the fact that they are the ones needing it. I can't see the working population being too pleased about that imbalance.

I understand that but the system, services, is broken. With many people needing care in hospitals when those beds could be used for medical patients. So people becoming more frail and isolated because they are on long waiting lists.

I think a good stepping stone would be to have halfway care, say for hip replacements, where the care becomes physical not medical for a finite period.

And then the discussion needs to return to assisted dying. If dementia effectively makes you a care home prisoner, you don’t recognise anyone you cared about, you have absolutely no autonomy over your life. Who wouldn’t want to “slip away” with dignity?

It’s very complex.

Need, dignity, possibility, cost, staffing, buildings, agreement, access, choice.

Everyone has a perfect vision of what they would want without wanting to pay for it.

A complete overhaul needs to be thought out, from the first brick upwards, if it is to in anyway succeed. It should take years not thrown together in a few months.

I was wondering the same.
I had a friend who lived with her dad, and when he died she got the house they lived in. She is on benefits and would not have been able to pay 10% of the value of the house.

I'd be surprised if Burnham can get it approved by his back benchers. Because it's basically a tax on "normal people" rather than a tax on the rich which just doesn't fit with the left wing of his party who are obsessed with the politics of envy, spite and hate. I think he'll have to offer them something to get them on board with supporting the 10% rate. Maybe tiered rates so that "the rich" still pay a lot more or maybe keep a relatively high threshold of maybe £500k or so. By the time they've "fudged" it to keep the back benchers happy it'll probably not raise enough.

I think the issue with the social contract is the ratio of old to young has changed.

They absolutely paid for thier predecessors and did what was asked of them, but when pensions were set up it was 5 people to a pensioner, its steadily declined and now its 3 people per pensioner. There's plenty of men and women who retired at 60 or 65 still, where as current workers will be 67, 68 or older. So 'my contract' is to support 1/3 of a pensioner and working until 68, whereas my mum probably averaged 1/4 of a pensioner and retired at 60. Can I ask my child to support 1/2 a pensioner and retire at 70 and just say "thats the contract'

We do have to acknowledge the terms of contract has changed quite a bit over time and perhaps inheritance tax needs to change to help a bit.

Totally agree that you should pay for your own care.

@frozendaisy

I understand that but the system, services, is broken. With many people needing care in hospitals when those beds could be used for medical patients. So people becoming more frail and isolated because they are on long waiting lists.

Massive mistake to close down the convalescence homes where such people would have been moved to from hospital at the end of their "medical" care, but prior to returning to their homes. We had three such places in our small city, all pretty large with hundreds of beds. But the buildings were old, asbestos ridden, and needed replacement, but of course, no money to invest in new buildings, so they just closed them down in, I think, the 80s and 90s. Not all the wards were for OAPs with hip operations etc., some were mental health wards. Some wards were for recuperating accident victims, such as my brother who spent a few months in one after a bad motorcycle accident - he'd spent a few months in hospital having operations and awaiting his broken femurs to heal, but was unable to return home, so they "parked" him in such a ward in one of the convalescent hospitals where he got physio treatment, practised walking again, until he was capable of moving around himself when he was finally discharged home. There was a massive move to "care in the community" when these convalescent and mental health wards were closed down, which really makes no sense as it's a lot harder and more time consuming to "care" for people spread around all over the district rather than in one centralised location, so that the likes of nurses and carers can now only see a small number of patients in a day due to the travelling around, when they'd have been able to look after a lot more if the patients were all in one place!

I think everybody should pay NI right up until they die. At present you stop paying NI when you stop working, I believe. It used to be when you reached state pension age. This would raise an incredible Amount of money I would have thought.

I think they'd put a legal charge on the house so that the IHT cost would be recovered out of future sale proceeds.. They already do that with care costs when appropriate.

It should also be extended to ALL forms of income, not just wages. Either that or scrap it and increase the rate of income tax instead. Far too few people paying NIC which is just another tax.

I own my home as a joint tenant with my partner of over 40 years . I look after my disabled son and we have paid to have adaptations to the house .It would be a disaster if one of us had to sell if the other one died.Also what would happen to a jointly owned car etc.

I think it’s a fair system being proposed, and I think it’s fair also at 15% and maybe 20%, but I don’t know if that’s then hitting the tipping point where wealthier than me others won’t agree? And plan to avoid.

The principle though is pooling risk, and actually, populationally speaking, relatively few people need residential care, and fewer still more expensive nursing care. If they do, it’s on average for a few years only, I think life expectancy in nursing homes is c. 18 months only.

So it’s like NHS really, we all pay NICs and taxes but 1/3 of us only need costly cancer care, for example. But we’re happy to pay the tax as the direct costs to us as cancer patients if we had to pay out of pocket would be devastating for some (suggest read Lionel Shrivers So Much For All That for an example).

I do suspect as an aging society, the costs could increase as we live longer, and people may more readily and earlier seek out residential care as it’s now cheaper and ‘already paid for’. Also, as healthcare outcome improvements for younger adults needing lifelong care continues its growth (this is the fastest growth sector, costing most of ASC budgets) expectations and costs will rise too. We probably also need to pay more to improve the quality of social care. Having said all this- life expectancy is now flatlining and future generations are smaller- I think we have a population bulge now/soon, but that passes and then care demand will fall as population decreases.

I think this system needs to consider the inequality between young adults care (generally better quality, more £££ goes on it) and old adults care AND residential vs domiciliary care, which currently doesn’t take into account assets like the 1.5m£ house someone getting care is living in, if their cash falls to less than £13k ish, all their care in home is free. Tech means the future model of care and support will be taking place more in people’s homes and so this sector really needs close scrutiny.

We have needed this reform for a long time.

I think Burnham should just get on with it and bring it forward, 23 reviews are enough and the Gvt has a big enough majority now.

But I think he will instead head into the next GE with it as a proposal and I worry this opportunity will be lost.

But if you've got £350k, why would the state pay for you?

And @XenoBitch - I think your friend ought to be obliged to take out a mortgage against the home asset to pay the charge. If it was a 10% of value, that would be small loan to value, a good rate would be accessible and if on a low income, that mortgage could run over 10 or 15 years. Or they do a lifetime equity release for it.

Otherwise, if it’s just a charge put against the house, that house could pass to that friends children, and children children and so on and never actually sold, the charge is never paid. That money is needed to payback now, the care already received.

thats what happens now- the state pay and once you're dead the house is sold and the money collected by the state. If you live for 24 months in a care home, then there maybe money left over form he 3350k but if you lived 4 and a half years the money would all be taken by the state for your care

Otherwise, if it’s just a charge put against the house, that house could pass to that friends children, and children children and so on and never actually sold, the charge is never paid. That money is needed to payback now, the care already received.

can the deeds be changed without a charge occurring then?

The issue with the idea of individuals responsibility is, yes if i have 350k, why should the state pay for me. It makes sense and it is what happens now.

But the current system is the state will pay for me if I dont have 350k and whilst there is the concept of deprivation of assets etc, there's nothing really stopping someone running fancier cars, having nicer clothes and going on fancier holidays, eating out a more, and choosing easier jobs for 40 years. Small lifestyle differences accumulate. So Mr Frugal pays for more care than Mr Frivolous. And furthermore Mr Frugal is paying an enhanced rate out of his 350k to subsise Mr frivolous room in the same home- so why cant he at the very least least share that bit with others so his own fee reflects just his own care. Its very hard to stop people spending money they earned in case they might need care, without also harming people who dont earn much.

We also have a very fine line between whats social care and whats medical care which we seem happy to socialise the risk for.

I agree with this.

Baby Boomers did so well out of this aspect of the Social Contract as a bulge generation. They only had to fund a much smaller older generation and had lots of working age people to share this burden with. Now we have fewer working aged people and more old people. The burden now is much heavier.

The frustrating thing is that we all knew that this demographic change was coming well before now. Baby Boomers should have been paying more when it became apparent that they were a bulge generation. The government didn't ask them to do this as they knew it would be unpopular. We now have a massive bill and nobody that wants to pay it.

The 10% levy makes absolute sense. It could have been avoided if people had paid more during their working lives but they didn't and that boat has sailed now.

Personally I think the person requiring care should pay for it but the cost of provding care should be heavily regulated

if the cost for providing care was heavily regulated then care homes would close, companies want good returns. If you chop the profit then they will move on to something else to make money. The state isn't in a position to take over that role

much as I agree care home costs are a scam by many companies

If you are self funding (if you have any pension/ assets/ savings) you will pay fees of around £2 to £3k per week. You are allowed only a few £ of your own money for toiletries, treats and so on. When you get down to £23k savings you will be entitled to some state funded support. Unless the care home is deemed too expensive in which case you will be moved to a cheaper home or your family will be asked to top up. Your pension and interest on savings will still be used for fees. If an adult over 60 is living in your property, a charge is placed on the property and it will be sold when the other adult dies or needs residential care.
If you are self funding, your fees will be substantially subsidising a state funded resident. You will still be paying income tax on your private/ work related pension.
Carers visiting you at home also need to be self funded and this is means tested based on pensions and savings. Self funders keep the care system going.

Fairer to whom? People who want money they haven't earned to be given to them?

If you only pay 35,000 so you can keep the rest that's about 6 months' worth of care? How is the rest funded? Are you suggesting everyone pays quite a lot more throughout our lives in levies to find the end of life care we'll need - even those people who will receive no inheritance at all?

This idea that people don't need to pay for the care they need is odd.

I think it’s a great idea honestly. It’s fair and stops people feeling badly done to and stressing about property and hit

This idea that people don't need to pay for the care they need is odd.

But the issue is that a lot of people don't pay for the care they need even if they are very well off - its only the ones unlucky enough to get eg dementia and need "social" care that have to pay. A multi millionaire with cancer does not have to pay for the social elements of their care - and for a lot of cancer patients that is what their residential or domicilliary care is. If everyone paid for their care then your position would make sense (although it isn't clear what happens to those who can't afford it). But when (as now) only a small proportion have to pay depending not on their care needs or even their finances but just on what illness they have contracted, it isn't fair. At least charging everyone 10% means that the burden is spread over the social contract in the same way as other care is funded.

Quoting my own post is a bit main character I know, but:

The principle is pooling risk, and actually, populationally speaking, relatively few people need residential care, and fewer still more expensive nursing care. If they do, it’s on average for a few years only, I think life expectancy in nursing homes is c. 18 months only.
So it’s like NHS really, we all pay NICs and taxes but 1/3 of us only need costly cancer care, for example. But we’re happy to pay the tax as the direct costs to us as cancer patients if we had to pay out of pocket would be devastating