Fears PM will try to impose 10% levy on ALL inheritances

Andy Burnham was last night warned against reviving his ‘nightmare’ plan for a ‘death tax’ to pay for social care.

The Prime Minister has long favoured a 10 per cent levy on all inheritances and yesterday said he wants cross-party agreement on resolving the care crisis.

Kemi Badenoch said she is willing to work with Mr Burnham on the issue but the Tory leader warned that any solution must be funded by spending cuts, not costly new taxes.

Reform UK’s Treasury spokesman Robert Jenrick said the so-called ‘social care levy’ would result in the number of families paying tax on inheritances rising twentyfold. 

Writing in the Daily Mail, he said the plan would ‘rob’ hundreds of thousands of pensioners each year.

‘This universal levy would hit the tiny bungalow and the ex-council flat just as hard as a great country pile,’ he said. ‘It’s every pensioner’s worst nightmare.’

Mr Jenrick said Labour had no mandate for the idea – which was not in the party’s election manifesto – and warned the PM had a duty to call a general election if he wanted to force it through.

But Mr Burnham yesterday said he believed he could push through ‘major changes’ before the next election, which must be held by August 2029.

[data-podcast-container] #embed-iframe-wrapper { min-height: 160px; } [data-podcast-container] header#podcast-container-header { transform: none !important; } Podcast All episodes Play on Apple Spotify

Andy Burnham was last night warned against reviving his ‘nightmare’ plan for a ‘death tax’ to pay for social care

Kemi Badenoch said she is willing to work with Mr Burnham on the issue but the Tory leader warned that any solution must be funded by spending cuts, not costly new taxes

He said the NHS could ‘collapse’ unless social care is fixed. The PM has spoken movingly about social care, describing how his father has been admitted to a home after developing Alzheimer’s.

He will use a speech tomorrow to commit to fast-tracking reform of a care system he has described as ‘broken’. 

He will say that a review led by Baroness Casey will be accelerated to enable changes to begin before the end of the decade.

DAILY MAIL COMMENT: King of the North is rapidly turning into a robber baron

At the weekend Mr Burnham said he was determined to ‘run towards’ problems others have ducked for years.

He told the BBC: ‘Whatever political capital I have I will put into fixing broken social care, and I would not want to leave office without having brought in substantial change.’

But tomorrow he will stop short of saying how the estimated £18.5billion cost will be met. 

Yesterday he swerved questions about whether he will revive his plan for a levy on all estates.

The Prime Minister said a lasting solution would have to be ‘cross-party and one the country can support’.

‘On this issue no party is in a position where they’ve got the high ground,’ he said. ‘We’ve all failed on this issue, over decades, and the pressure now on the NHS as a result of that failure is huge.’

But Mrs Badenoch warned she was not willing to write the PM a blank cheque. In a letter to Mr Burnham, the Conservative Party leader said she was ‘happy to work with you and other parties’ on the issue. 

But she said any plan must not penalise those who have saved to make provisions for their own care in later life.

And she warned against any new taxes, saying: ‘The money must be found by reducing spending. 

‘You must rule out any tax rises or increased borrowing that will ultimately fall on the next generation to pay for.’ 

She added: ‘The last thing Britain needs is further tax increases.’

Downing Street declined to say how social care reform could be funded. Mr Burnham has suggested he wants social care incorporated into the NHS as part of a national care service which would be free at the point of use.

And he has consistently called for the introduction of a social care levy. As health secretary in the last Labour government, he proposed a 10 per cent flat levy on all estates. 

It would have replaced inheritance tax. The idea was branded a ‘death tax’ by political opponents.

But Mr Burnham has stuck with the idea. Speaking during his Makerfield by-election campaign in May, he said: ‘I know there’s a great resentment about inheritance tax, so just take that away, perhaps, and look at a care levy.

‘It’s not about asking people to pay more, it’s just people pay in the most unfair way possible at this moment in time and I think there’s a much better way of doing it. 

‘People have peace of mind while they’re alive, because they get the care that they need, and then it will be dealt with in a much better way.’

But the idea would involve hundreds of thousands of people who currently do not pay inheritance tax finding they are liable for the new social care levy.

Mr Jenrick said 650,000 families a year would be ‘dragged into paying a tax on their relatives’ death’. 

Currently, estates valued at less than £325,000 do not pay inheritance tax. This threshold increases to £500,000 where a family home is left to children or grandchildren. 

Couples can combine their allowances, allowing them to pᴀss on ᴀssets of up to £1million tax-free in some cases.

Inheritance tax is charged at 40 per cent on ᴀssets above the threshold, although many wealthy individuals find legal ways to avoid it.

Under Mr Burnham’s plans, even modest inheritances of a few thousand pounds would be taxed at 10 per cent.

The Prime Minister has said he wants cross-party agreement on resolving the care crisis

Reform UK’s Treasury spokesman Robert Jenrick said the so-called ‘social care levy’ would result in the number of families paying tax on inheritances rising twentyfold

Critics have questioned whether the levy would replace inheritance tax or be added on top of it. 

Reform UK suggests that while the levy could raise £20.5billion by 2028, this would be reduced to £11billion if inheritance tax was scrapped at the same time.

A Whitehall source said it would be impossible for Mr Burnham to axe inheritance tax. ‘You would be cutting tax for billionaires while increasing it for working people,’ the source said. ‘That looks politically untenable for him.’

Mr Burnham’s ally Steve Rotheram suggested that a wealth tax could be used to pay for social care instead.

The Liverpool City Region mayor told The News Agents podcast: ‘I’d look seriously at a wealth tax. 

‘You’ve had wealthy people saying that there could be a small additional tax on them to dig us out of a bit of a hole.’

The Health Foundation think-tank has estimated that if the state covered the costs of everyone receiving adult social care services in England, an NHS-style system would cost £18.5billion a year by 2035. 

This is on top of existing costs, which amounted to £28.7billion in 2024/25.