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Is Labour set to revive ‘death tax’ plans?

Labour is facing pressure from within its own party to so-called “death tax” reform proposals to pay for social care costs, the Telegraph reports.

Ahead of the 2010 general election, Labour had considered imposing a 10 per cent tax on people’s estates when they die but abandoned the plans following a barrage of criticism.

However, in July last year shadow health secretary Andy Burnham reportedly told delegates at a Fabian Society event that he favoured a new estates tax and that Labour was holding “internal party discussions” on the proposals.

And according to reports, Labour party grandee and former home secretary David Blunkett told delegates at a Policy Exchange event in London he supports revisiting the policy.

He said: “I’m also interested in a much more refined, properly monitored equity release scheme because I think those who have got considerable capital assets – and certainly in London and south east because of property prices they have – [should do more].

“Let me be really controversial: Why should their sons and daughters or nephews and nieces win the lottery when they die?

“Because that’s what it amounts to compared with people in the rented sector and particularly in low terraced housing, even if they own it, in the North and Midlands.”

Asked whether he was referring to the death tax reforms, Blunkett reportedly responded: “Yes.”

“I think that it’s got a lot of merit – properly organised, properly regulated so it’s not fraudulent – where people could release some of the equity to pay for their care and still allow their offspring or their nieces and nephews to inherit a pretty good bung,” he added. 


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. So it would appear that the Labour manifesto is going to be totally built on the premise of “you rich bast**ds in the South are going to pay for all of those poor people in the North…cos’ you live in big expensive houses whether you are alive or dead!”

  2. So I give up smoking and save the £7 per day for 40 years and invest it in a property and when I die my savings/home are taken and given to some smoker who didn’t bother to save because they knew Labour would steal my hard earned money/home.

  3. “Let me be really controversial: Why should their sons and daughters or nephews and nieces win the lottery when they die?”

    Or, to put it another way…

    “Why should people be able to pass on their hard earned money, which has already been taxed, to whoever they wish?”

    Perhaps I’m being simple but the most obvious answer is that it seems fair and reasonable.

  4. Broken Britain, as the message from all quarters is do well and we will rob you, I mean tax you.

    So, I go into long term care, they strip my estate and then when I die they take a further 10% of the £23,250 they did not take.

    It is little wonder there are many out there who just say whats the point, in working long hard hours above and beyond, as I am only working to support others and depriving my family of my time.

    What will they look to tax next, sex, I am sure they would if they could.

  5. I agree Jabba, but I recall that the 10% death tax was to be taken from everyone, which would hit Labours core supporters far more than those in the south and is therefore unlikely to be announced prior to the election.

    Arguably a tax of 10% on everything with no VCT/EIS/BPR/PET reliefs will probably be more acceptable and raise more money that a tax of 40% over a certain threshold with lots of reliefs and allowances. Arguably the ‘super rich’ never pay IHT; its only paid by the middle-classes.

  6. @JTH – Quite, although there appears some contradiction in some views.

    I read in other comments sections (BBC etc) how upset some folk are that London / the South East, swallows up the lions share of public expenditure. All I can say is I would be happy to be of assistance by voting for independence….

  7. Politicians manifesto is to promise to the majority things that the minority provide noting that a majority is 51% of those that bother to vote and that promise doe snot need to be based on fairness, decency or perhaps the one test I would always apply, do unto others that I would be happy for them to do to me….

  8. Good Mortgage Man 5th February 2015 at 1:44 pm

    Typical comment and exactly what I would expect from David Blunkett. The politics of envy.

    That is exactly why I will never vote Labour in my life.

    They have no relevance to me whatsoever and never have. I abhor everything they stand for.

  9. @ Philip Gosling.
    By giving up smoking you have robbed the exchequer of £5 of tax every day that’s £73,000 over the 40 years. Hand it over now.

  10. Paul Woolley

    good one

  11. Nice one Paul W. The NHS commissioned a report decades ago about the effect of punitive taxes on smokers. The report came to the conclusion that it would actually create a significantly negative affect on NHS finances, without much positive compensation.

    It does highlight the problem of anticipating the consequences of any policy, especially when those policies are likely to change every few years.

    So once again Advisers tremble, for you know that the FCA will believe you knew about these changes before they were even discussed, let alone installed. I suppose if we wine back to the 98% tax rate there could be some improvement. Very few people (left in the UK) would have enough left to be able to investment in shares and property. Regulation would be irrelevant. One might even welcome that just to see the look of panic on the faces of FCA employees.

  12. Those in the South sometimes need the equity in their houses to either keep them in retirement or if they are really lucky and had a final salary pension (often a govt one now) they might just about have decent enough pension so that they can lend some of their equity to their children so they can afford to buy a home where they grew up and work rather than have to move north or abroad (the brain drain) to find cheaper accommodation or better pay.
    I will not be getting a bung when my parents or in laws die…. I am helping them AND my children where I can., whether that be with money or my time (time is money)
    Get off the politics of envy PLEASE.

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