Charges, Taxes, Estates and Care

Charges Taxes Estates and Care

Modeling different types of charges and taxes on the value of estates to raise revenue for England’s care system.

In debate on long-term care funding in England and Wales, a number of stakeholders continue to advocate a solution built around universal free personal care for all, with the extra public spending required funded through a tax on the value of estates.

This research explores what the effect of different types of inheritance taxes would be on the value of estates. The report also looks at alternative models built around a lump-sum charge on the value of estates.

The report makes two key observations. First, the abolition of means-testing in social care would likely require tax-rates upwards of 13%. However, at such a rate, many families would likely move their wealth around in order to lower their exposure, casting severe uncertainty on the revenue that would be derived.

Second, a ‘charge + cap’ model – in which a lump-sum charge was applied to the value of estates, but with the proportion of an estate that is payable ‘capped’ – would overcome many of the problems associated with an estate-tax model.

This report has been published as part of the Care Funding Futures work programme run by the Strategic Society Centre. The Care Funding Futures work programme has been made possible by the support of Bupa, PwC, Age UK and Tunstall.

Author: James Lloyd, Strategic Society Centre

Download the report: Charges Taxes Estates and Care

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