Plans for ‘death tax’ to pay for social care

A LEVY to pay for the Government’s proposed National Care Service could take 10% off people’s estates after they die, it was revealed today.

The Government already ruled out a flat-rate £20,000 tax on estates to pay for social care for pensioners.

But Health Secretary Andy Burnham made it clear that a compulsory levy based on a percentage of the value of an estate was being considered.

And Mr Burnham suggested 10% as a possible level for the levy.

If the so-called “death tax” was introduced in Scotland, the money raised would be pumped into the existing programme of free care for old people.

A 10% tax would leave relatives of middle-income earners with estates worth £500,000 with a £50,000 bill when their relatives die. This would, reportedly, be on top of a £70,000 inheritance tax bill.

But Mr Burnham insisted the proposal was not yet Government policy, telling a conference hosted by Age Concern and Help the Aged: “This is just an option.”

The proposed reforms are designed to end the current lottery under which some people lose their homes and life savings if they spend lengthy periods in residential care.

Mr Burnham is expected to announce the Government’s preferred option in a White Paper within weeks.

Paying for care of pensioners out of general taxation is not “fair to the working-age population”, he told the conference.

And a voluntary levy would be “more expensive”, costing those who opted to contribute an estimated £25,000 each.