Should we be more open to a wealth tax?

Aveline

But it's not free money. In my case it will be what's left of carefully saved and looked after proceeds of a life's work. It's already been taxed over and over over the years.

It's free to the heirs, which is what I meant.

I do understand the wish to leave something behind - in fact I think it's wrong that people are expected to sell up to pay for the social care that many get free, and many disagree with that point of view, I know.

The problem is that we have to get money from somewhere. We had a society which provides so much free at point of use (roads, police, defence, education, health and more) yet not everyone contributes to paying for it, so we need to find ways of raising more than we currently do. We could tax workers even more, but so many are suffering in the COL crisis as it is.

IHT is a way of allowing people to keep the money they've earned while they are alive (and we can't take it with us) and taxing the heirs, who haven't earned or paid tax on it. It seems fair to me, but if anyone has any better ideas I'd be happy to change my mind.

fwiw For those who bought our houses before 2000, we benefitted from the interest on our mortgages attracting MIRAS (phased during the 90's) So unlike people who paid tax on all the money used to rent their home, we, homeowners, got some tax relief on the overall cost.

Colossally high interest rates on mortgages though. 15% in our case

But also colossal profits, depending on area. A lot of people who will attract IHT will do so because of that, not so much because they have worked harder or saved more than others - it was more that their postcode meant their house earned more than they did.

None of this is ‘fair’, but if we need to get more money in to pay for NHS, defence and so on it has to come from somewhere, and IHT is free money for the recipients, so IMO is a better target than PAYE.

Which also affected those in privately rented properties as landlords had to increase rents. Also, those high interest rates were preceded by and followed by huge increases in the value of properties. A house we bought in 1986 of £98K was sold in 2023 for £1.7million, earning over £33K a year whilst providing a very nice home (not for us as we moved to a different house in 1999)

A Care Supplement on IHT set at say 10% on all estates would raise a massive amount, on a modest estate £250k a modest £25k. On £1m a hefty £100k it's free money applied before IHT at the present rate, the existing rates are far to generous to the wealthy home owners, everyone should pay something.

I absolutely agree and I'm someone who would potentially be hit hard by such a tax as I am very fortunate to live in a lovely house. If I were a young person today with OH and my salaries adjusted for inflation, there is absolutely no way that we could afford to live where we do. We have benefited in so many ways from inflationary house prices and we're happy to pay our share to help those who have not been as fortunate. Yes, we've worked, saved and we've had good health but I don't kid myself that what we have has been "earned", some of it just fell into to our lap whilst others were left to struggle!

I'm not sure if all this applies to us Grans here. I sincerely doubt we are what others might think of as wealthy. Look at Russian oligarchs etc not to mention grossly overpaid footballers and those cashing in on eg the World Cup. I've been reading about who really profited from it.

Aveline I'm not what you might call "wealthy* and much of our money is tied up in the value of our house. I think this is true of many older people but the increase in house prices can't be ignored.
1980-2000 280% with the volatile 80's showing increases of 164% as well as dips and high interest rates
2000- to date 250%- 257% nominal increases depending on where in the country you live. Renters get none of theses benefits but pay a heavy price when property prices increase which as time has gone by, with stagnant wages and inflation it has got harder and harder to get on the housing ladder.

It right that tax should be paid on unearned income.

There is already an IHT threshold allowing a significant amount of a couple's property inheritance ( circa £1million ) to be handed over tax free to their children. The IHT threshold should definitely not rise to £3-5 million as previously suggested.

I would also support a care supplement tax payable on death to the state along lines suggested by David49 to fund a National Care Service that provides regulated, safe care in older years when someone can no longer live independently.

Go after the £billionaires and £multi millionaires

Leave those who have worked (and are still working) and saved for their retirement and personal care, as successive governments have encouraged alone.

They have paid taxes throughout their lives, often at the higher levels, continue to pay taxes on pensions and any interest earned.

Taxing them more on death as suggested (care supplement) when they have provided for their own care is beyond the pale as far as I am concerned. Especially if it is in addition to IHT

I think I'd far rather pay the care supplement on top of IHT at along the lines David49 suggests than pay £2k a week care home fees for an unknown period that could go on for several years.

Not everyone will go into a care home, thats true- but we don't know whether we will or will not. Even if we don't we need other care as we age to enable us to live independently as best we can in our laters years.

I'm in my 60s and my monthly osteoporosis medication costs the NHS £422 a month. I've had a dexa scan, 2 ultra sound scans, various X-rays and 2 CT scans in past months- each CT scan costing around £2k. Surgery to come- private costs of surgery around £4-5 k, if I can't tolerate NHS waiting times after investigations completed. I feel giddy and guilty thinking how much I'm costing the NHS- but remind myself up until the past year, apart from obstetrical care, I was fairly cheap!

The cost of an aging population is high.

The cost of an aging population is high.

But it's not as if the money is disappearing into a black hole, It pays for wages and goods and services and so circulates in the economy, attracting tax as it goes around.

If a nation believes that part of the duty of government is to care for all its citizens and we believe that to be only right, it/we must accept the cost of funding the care.

It must also recognise that many of its older citizens provide support to their families and their neighbourhoods in ways which, though they cannot be given any monetary value, can support the 'emotional health' and cohesion of their communities, in itself a valuable contribution.

I don't know though. I've always thought I should pay my taxes however, with our awful Scottish govt it's appalling to see them frittering away our money in doomed and pointless court cases and vanity projects. The sheer incompetence is staggering. However, that's not the point of this thread.
I agree with GrannyGravy13. Re care costs: how about a special insurance company? Annual subs based on actuarial estimate?

The concept that everyone pays something on death according to their circumstances will do more to level wealth than anything else. If you are wealthy you have enjoyed whatthat brings, it's time to pay back to the health and care you have received. Maybe you have been luck and no long term care was needed, thats a lottery, Im sure the opposition will call it a Death Tax, regardless it's well overdue.

David49

The concept that everyone pays something on death according to their circumstances will do more to level wealth than anything else. If you are wealthy you have enjoyed whatthat brings, it's time to pay back to the health and care you have received. Maybe you have been luck and no long term care was needed, thats a lottery, Im sure the opposition will call it a Death Tax, regardless it's well overdue.

The wealthy (yet to have a definitive explanation of who these people actually are) use private health care, private schools are not likely to rock up at your local council care home.

Until I see an explanation of who will have to pay this so called wealth tax

Until I see an explanation of how much does one have to have to be classed as wealthy

Until I see a government who actually has a credible plan.

Until I see a government that goes after the big multinationals as opposed to the SME’s who are easy pickings

I remain against extra taxes for the man/women on the street

MaizieD

^The cost of an aging population is high.^

But it's not as if the money is disappearing into a black hole, It pays for wages and goods and services and so circulates in the economy, attracting tax as it goes around.

If a nation believes that part of the duty of government is to care for all its citizens and we believe that to be only right, it/we must accept the cost of funding the care.

It must also recognise that many of its older citizens provide support to their families and their neighbourhoods in ways which, though they cannot be given any monetary value, can support the 'emotional health' and cohesion of their communities, in itself a valuable contribution.

It's true I am still contributing- still paying taxes on my earnings- still doing some work for the NHS, still supporting and advising teenagers and vulnerable adults in police custody, still a volunteer in my local community, still circulating money by way of my spending.

But the cost of my NHS care and treatment still has to be met. Currently the government does not have sufficient funds to fully meet the health and social care needs of the elder population. I am more than willing to fund the cost of my care whichever way the government of the day sees fit.

A couple who have £1 million of property equity at death is wealthy enough surely. A couple currently has about £1 million IHT exemption* before* any IHT is payable. A single person about £500k if they pass inheritance so a descendant.

That is more than enough to hand on as an inheritance tax free gift in my opinion.

Not sure what is the definition of "the man/women on the street"?

David49

A Care Supplement on IHT set at say 10% on all estates would raise a massive amount, on a modest estate £250k a modest £25k. On £1m a hefty £100k it's free money applied before IHT at the present rate, the existing rates are far to generous to the wealthy home owners, everyone should pay something.

This is what AB is suggesting, and I think it's a good idea.

As things stand, someone with (for round figures) a house worth £100k could easily spend 100% of it in a year or two in care, but someone with a £1M house would get the same care for 0.01% of their money. A simple cap on care is very unfair for that reason, but a percentage is fair to everyone, and might mollify those unwilling to have their heirs pay 40% of anything over a million pounds when they die.

I'm not sure I understand the second sentence - are you suggesting a 10% charge as well as IHT, and that 40% is too low a rate? My understanding is that Burnham's plan is to replace IHT and Stamp Duty with the 10% levy, not to have it as an additional tax.

AB is yet to start as PM, so speculative to a degree, and no formal plan has been officially published. However here is the A1 Overview, of early policy signals reflecting his core campaign platform.

Andy Burnham (AB) has proposed a major overhaul of the UK's wealth and property taxes, highlighted by plans to abolish inheritance tax (IHT), replace stamp duty with a land value tax, and implement a universal social care levy

⚖️ Inheritance Tax (IHT) & The Social Care Levy
Burnham has long advocated for a complete restructuring of how the state funds elderly care, aiming to create a system that is free at the point of use.
Abolishing IHT Burnham has proposed scrapping the current Inheritance Tax system, which charges 40% on estates above specific thresholds. He has noted that there is "great resentment" toward the tax in its current form.
The New Care Levy In its place, he plans to introduce a 10% flat-rate universal "social care levy" on all estates upon death.
How it Works Unlike traditional IHT, a universal levy means everyone would contribute from their assets, savings, and homes, though the wealthiest would still pay the most in absolute terms.
Agricultural Reliefs Burnham's team has also indicated he will "look again" at previous, highly unpopular government changes that squeezed inheritance tax reliefs for farmers.

🏡 Stamp Duty & Property Tax Reform
Burnham argues that the UK's current property taxation regime is outdated and acts as a barrier to social and economic mobility.
Scrapping Stamp Duty He plans to phase out Stamp Duty Land Tax (SDLT) alongside Council Tax.
Land Value Tax To replace these transaction and local taxes, Burnham backs a "proportional property tax" based on land valuations.
The Fairer Share Model He has heavily endorsed a model proposed by the campaign group Fairer Share, which would replace stamp duty and council tax with a continuous flat annual levy equivalent to 0.48% of a property's value. Under this plan, a home worth £500,000 would face a standard tax of £2,400 per year.
Targeting Wealth To prevent tax evasion and target wealth, the proposed levy would double to 0.96%for second homes, empty properties, and foreign buyers.

That all sounds fine to me. I hope he goes ahead with it.

Sounds fine to me too. We'd be paying more on an annual basis but we wouldn't mind that. I think it would also encourage more people to downsize although I think it would probably have to be phased in.

Don't many most people already pay around £200 a month council tax (£2,400divided by 12 annual Land Value Tax ) f their house is valued at £500k? If their house is valued at £250k the annual LVT would be £100 a month, as proposed.

What it means if someone has a home valued at £2million they would be pay £800 a month LVT- ie more than current Council tax payment as they evidently are wealthy- seems fair to me.

But the cost of my NHS care and treatment still has to be met. Currently the government does not have sufficient funds to fully meet the health and social care needs of the elder population.

That is completely untrue, whatever the government, the Treasury, some economists, journalists etc. etc. tell us.

The truth is that it is the state, via the government that issues our money. Some banks are allowed to do it, under licence, and control measures, from the government. Banks create money when they make loans, but the loans have to be repaid with interest, so, while the created money promotes economic activity, it isn't costless. The government, on the other hand, creates money when it spends into the economy and only ever takes back a proportion of it via taxation. The surplus which isn't taken back is the money we have to spend and save.

There have three notable episodes of government money creation in the last 20 years, a total of some £900billion was created to save the economy ,(and the banks), after the Global Financial Crisis (GFC), after the result of the EU referendum and during Covid through Quantitave Easing.

It's arguable that this money was not always well spent by the government, look at the £billions squandered on useless PPE, but on the other hand, if it hadn't been done after the GFC lots of people would have ended up with no money in their bank accounts, and during covid, lots of people wouldn't have had their wages paid and many businesses would have gone bust. This is not, as people will try to tell you, a 'debt' which has to be paid off by our children and grandchildren, nor was it, as people will also try to tell you, inflationary.

Treating the nation like a household or a business, with a finite amount of money, is completely wrong. Neither of those can create their own money.

Not funding public services is partly a political choice and partly a consequence of the Treasury perpetrating the 'household budget' delusion. Why it adheres to this view of the national finances, which is 40+ years or more out of date is anybody's guess, but it is a terrible drag on a government which actually creates money every time it spends.

True MaizieD. The “household budget” analogy was employed with effect by Thatcher and has continued ever since.
Although false it means that the government can justify spending cuts, and manage public expectations.