Govt hints at ‘death tax’ for LTC funding
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The Government has hinted that it may propose a compulsory death tax on all estates to fund long-term care in the UK.
According to reports health minister Andy Burnham suggested that the Government’s LTC white paper, which will be published at the end of the month, might include proposals that would see a tax raid on estates after death.
The reports say the levy may be set at 10 per cent, on top of inheritance tax, and will be capped at £50,000 for estates worth in excess of £500,000.
Burnham was speaking at a conference organised by Help the Aged yesterday. He said that the option of a flat rate £20,000 tax had been mooted.
Burnham also revealed other options that may be included in the white paper. As well as the death tax, a means-tested amount spread across the whole retirement maybe levied or pensions could be deferred for three years to help pay for the National Care Service. The Government says one of these options would make sure all UK retirees have access to free LTC.
The Tories have proposed an optional levy of £8,000 instead of a tax.
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Readers' comments (8)
richard jenkinson | 11 Mar 2010 9:13 am
The sooner the Labour Government is out, the better for everyone
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Paul Hunt | 11 Mar 2010 9:34 am
This will hit 'middle England' where net assets of £500,000 cold mostly be the family home. This will equalise taxes: 50% on income, 50% on savings - why don't they just pop CGT up to 50% to keep everything in line?
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Vanessa Owen | 11 Mar 2010 9:58 am
The reality is that the current situation is not sustainable. If the consensus is that long term care should be provided by the state it will have to be paid for. It will be interesting to see the detail behind the proposals.
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Paul Thompson | 11 Mar 2010 10:38 am
Whilst agreeing with Vanessa that something will have to be done, basing the cost on the value of people's assets seems harsh. The cost of LTC for any individual will depend on so many factors, including age, lifestyle, heredity, so just because someone has a large estate, they should not have to pay disproportionately. I can see a big opportunity for IHT/LTC planning if this runs!
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Julian Stevens | 11 Mar 2010 11:24 am
Same Old Labour solution to everything ~ increase taxes. What is needed is an initiative to kickstart private provision (tax relief on premiums to LTC insurance plans).
The saving to the public sector, not just in monies paid out but administration costs would be immense and would very probably balance out the tax revenues foregone. Far fewer people would lose their homes, the private sector would thrive, wealth passing down from one generation to the next would increase and we'd have a better society as a result, with people doing more for themselves and relying less on a huge and hugely inefficient state machine.
Old Labour cannot see this. Its solution is always the same. Tax, tax and more tax. New Labour was a con, a scam, fabrication, call it what you will. It never really existed and those who voted for it were just taken in by a lie.
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Anonymous | 11 Mar 2010 1:26 pm
Why not take all our money and give us back some pocket money?
It seems to me that under labour one is better off not saving not being responsible not putting anything away for a rainy day. Instead we would be better off living for and enjoying the moment rather than let this tax hungry government take us for every penny it can.
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Martyn Collins | 12 Mar 2010 0:24 am
It has always amazed me how we can have wealthy criminals incarcerated at the tax payers expense getting free board and lodgings! Why not charge them for their time inside and use their contributions to offset the costs of care for the elderly?At the moment you are charging innocent people who have supported family and country through the generations yet con men thieves and murderers are allowed their care for free. No assement of the latter is carried out on their ability to pay for their care. Some will say that criminals didnt ask to be put where they are BUT let me assure you..the majority of people in care woud rather not be there either and yet are forced to pay for it! What sort of dual payment system is this? I know of one chap who recently at the age of 60 has got 2 years in one of her majestys institutions.....he is worth arround 20 mill pounds. Reports I have is that he is quite enjoying his life inside as he is getting fit, teaching other criminals how he made his money and I am told looking better than he has ever in the past 20 years. What a great system we have...barmy if you ask me! And yes Julian Stevens is correct....why not tax relief on LTC premiums also. Give the premiums at the highest rate...min 40% or more for everyone.WHY? well its pretty obvious. For every 4 that take out a LTC policy...only 1 will need it so the tax relief given to the other 3 will have been just a case of smoke and mirrors.
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Tom Scott | 12 Mar 2010 8:56 am
Road Fund was collected to build and improve the roads. National Insurance was introduced to fund the welfare state. Both are now just taxes that go into the general taxation pot. We cannot afford to keep the roads in good repair and the welfare state is failing (hence this piece).
Let's have a think about what may happen in ten years time. The death tax will have become the norm and the government will be saying that state provision of long term care is no longer affordable.
Plausible?
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