Death tax of ‘at least 13%’ to fund free care

A ‘death tax’ to fund universal free personal care would probably be unworkable, even if ministers chose to introduce one, according to a new report.

The Strategic Society Centre said it had calculated that an additional inheritance tax rate of at least 13% would be required to fund such a move, not accounting for increased numbers of people seeking to avoid the tax.

The thinktank undertook the research using HM Revenue and Customs data from 2007-08 and its findings are contained in the report Charges, Taxes, Estates and Care: A comparative analysis.

Centre director James Lloyd said the research had been undertaken on the grounds that property wealth was likely to form part of the care-funding solution, while some campaigners felt a universally funded model had not been given proper consideration.

“A 5% tax on estates to fund universal free care wouldn’t yield nearly enough – only around £3 billion,” he said.

“Our calculations show a tax-rate in excess of 13% would be required, but at those sorts of levels, so many families would respond by transferring wealth around that it would be impossible to know what new revenue would be brought in.

“The estate tax idea doesn’t seem to be workable as a policy to fund universal free long-term care and campaigners needs to rethink it.

“Instead, campaigners for universal free care would be well-advised to adopt a ‘charge + cap’ model.

“It is marginally less progressive, but would be much more workable as a policy solution.”

Mr Lloyd said that while the Dilnot Commission had made it clear that a “death tax” was off the table for its recommendations, which are due in July, most commentators believed that the point when “property wealth” became available was on the death of its owners.