Andy Burnham is reportedly contemplating a potential “death tax” as a means to generate substantial funds for adult social care. During his tenure as health secretary under Gordon Brown from 2009 to 2010, Burnham advocated for replacing Inheritance Tax with a 10% levy on all estates to finance free social care.

When asked if he still supports this concept, Burnham’s official spokesperson stated that they are awaiting his forthcoming update on the matter. Burnham emphasized the necessity of implementing a new system, highlighting the potential collapse of the NHS if social care issues are not addressed promptly.

The new Prime Minister is scheduled to address social care matters this Wednesday but cautioned in a recent BBC interview that he cannot provide an exact timeline for potential changes. Instead of immediate adjustments, there is a possibility of accelerating the Casey Commission, an independent review focused on adult social care.

Currently, a limited number of families end up paying Inheritance Tax due to various rules and allowances in place. Approximately 31,500 estates in the UK incur an Inheritance Tax charge annually, applicable to estates valued over £325,000 with a standard tax rate of 40% on the surplus amount.

However, exemptions and allowances can significantly impact the Inheritance Tax threshold. For instance, transferring your home to descendants can increase the threshold to £500,000 with additional allowances. Unused Inheritance Tax allowances in a marriage or civil partnership can be passed on, potentially enabling couples to pass on up to £1 million exempt from Inheritance Tax.

Furthermore, strategies such as leaving a portion to charity in your will can reduce the Inheritance Tax rate. Gifts made more than seven years before death are typically exempt from Inheritance Tax, with exceptions for assets still benefiting the donor.

If a universal 10% levy on estates is introduced, individuals with a £100,000 estate would owe £10,000, contrasting with the current Inheritance Tax threshold of £325,000. Higher-valued estates would incur more tax under a 10% levy scheme.

Beginning next year, more families may face Inheritance Tax obligations as pensions will be included for the first time. Inherited pensions are expected to be subject to Inheritance Tax from April 2027, impacting an estimated 10,500 estates with unused pension funds and 38,500 estates facing higher tax burdens compared to previous regulations.