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 agree, incredibly difficult for the council to prove deprivation of capital unless it is caught by the duck test. If someone does it after they've been to the GP for a dementia/alzheimers consultation, then there's clear intent they've transferred assets with an eye on long term care needs, likewise if someone does it when they're very old and/or infirm (and thus more likely to need care than someone a decade or two younger). But if someone does it who is healthy, expects to have a decade more of "healthy" lifestyle/activities etc., then a council won't have a hope in hell's chance of succeeding in arguing deliberate deprivation of capital. It ALL depends on the facts/circumstances of each case. The ones that the council win are almost always caught by the duck test because the facts show the motivation was obvious. Muddy the waters a bit and the council will struggle.

I'm not really talking about anything but the 7-year rule, which you brought up. You seem to be having an argument you've invented.

You're also making a lot of assumptions. Few people can manage to give everything away before they die, especially property - so complete freedom from benefit is difficult. It's designed to be difficult so people don't game the system for their own gain. If you reach 75 and are in good health and decide to give away the majority or your assets, where will you live? Renting would require retaining some value to cover that, perhaps for 10/20 years. Or are you suggesting people don't have to pay rent either because of their entitlement to pass down their leftover money as inheritance?

You don't seem bothered by people not paying full individual costs for other things (like medical care) and then getting to exercise this 'entitlement'.

It would arguably make more sense to have 100% IHT across the board than to keep making a special case out of expensive care. It's not discretionary spending, but nor is it a cost everyone has like rent or food. It's something some people need a lot of only because of the particular infirmity or illness they get when old, and other people don't need at all. It's a good example of something where sharing the risk makes sense, like with medical costs.

It's not even the 'entitlement to pass on an inheritance' that's relevant anyway, really, although being able to pass one on would be a side effect for some people of a better system. It's more fundamental than that, it would be a social contract that says by joining in a system where everyone pays a bit (according to what resources they have) no one ever has to pay out all (or nearly all) their money for nursing care. Whether they then leave it to other people or spend it on holidays or donate it to charity would be up to them. The point wouldn't be doing one particular thing with it but simply still having it, not having it all wiped out just by being unlucky enough to get something like Parkinson's, while other people don't pay a penny for eg cancer treatment and get to keep all their savings.

'Death taxes' forced the very wealthy - particularly the aristocracy - to yield up a meaningful percentage of their wealth to the country that enabled them to acquire that wealth instead of passing increasingly huge fortunes down through private and privileged family lines so their descendents could be rich in money and land without having to contribute anything to the country. I'm all in favour of IHT.

If Andy Burnham introduces a Social Care Tax at 10% it should be levied on all estates, but the portion of estates currently subject to 40% tax should still pay IHT at a meaningful % (say, between 20 and 30%) and the whole estate additionally pays SCT at 10%. The SCT could not be avoided by creating trusts etc. The IHT avoidance criteria are generous anyway and Burnham should look at tightening those at the same time. In parallel, he could look at raising the IHT threshold or introducing a new sliding scale.

Half of the government adult social care budget is spent on people of working age, but people seem to be assuming that a SCT would just be for funding elder care so Burnham would need to clarify that. Also whether a SCT then means everyone gets free care either in your home or in a care home - the 'accommodation' part of care home fees is a big chunk, think of paying for an indefinite hotel room full board, so if you had to pay that, a majority would need to sell their house anyway.

'Everyone' pays more so 'some' can still get money they didn't earn.

Why should people still have money at the end of their lives? Why?? You don't need it when you go so paying out all of it isn't a problem. Except for those left behind who want to have it for themselves.

There's a lot of complaining that those who pay privately are subsidising others - but when it's the other way round, with everyone paying into the pot so you can keep your inheritance, suddenly it's a good idea.

You make a good point that some terrible, debilitating illnesses you get for 'free' and others you don't. I would certainly support taxing all inheritance at a much higher rate to support social care across the board. What sort of level do you think it would have to be set at so that absolutely everyone can receive free care, for all things?