UK Tories Attack Government 'Death Tax' Proposal

by Jason Gorringe, Tax-News.com, London

19 February 2010

The UK's main opposition party, the Conservatives, has claimed that inheritance tax proposals put forward by the Labour government to fund elderly care would hit 70% of the country's population.

Faced with rising costs of care for the growing elderly population, the government invited the two main opposition parties, the Conservatives and the Liberal Democrats, to attend cross-party talks to address the issue.

One proposal – which the government has not ruled out – is for a compulsory inheritance tax levy of 10% on estates, which would fund free care for the elderly. Currently, pensioners with estates worth GBP23,000 or more are required to fund their own care needs. Many are forced to sell their homes to pay for residential care – even though a number of studies have shown that care within a person's own home can be much more cost-effective. Of the population as a whole, 70% are said to have estates that fall above this threshold.

The Conservatives seized on the proposal, and quickly launched an election poster campaign encouraging voters not to vote for "Labour's new death tax", and implying that on average the levy would be GBP20,000 on each death.

The Daily Telegraph quoted shadow chief secretary to the Treasury, Philip Hammond, as saying: "The revelation that grieving families could be forced to stump up for a massive £4.5 billion a year death tax shows what a terrible solution this is to the problem of long term care."

“Labour should rule out a compulsory levy now so that we can get on with finding the right solutions for helping elderly people across the country."

Labour and the LibDems, however, were quick to dismiss the poster campaign, with a heated exchange of words between health representatives of all three parties on the BBC's Sunday Politics Show.

The government is expected to publish its proposals for funding elderly care within the next few weeks.

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