Proposed “Death Tax” to Fund England’s National Care Service Sparks Debate

The Labour government’s health secretary, Andy Burnham, has floated a “national care levy” that would apply a 10 percent charge to the value of a deceased person’s home. The levy would replace the current 40 percent inheritance-tax rate on estates above the £325,000 nil-rate band, but unlike the existing system it would have no threshold, meaning every estate would be liable. Burnburn’s aim is to raise revenue for an £18.5 billion National Care Service (NCS) that would provide free-at-point-of-use social-care services across England.

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Stuart Adam, a tax specialist at the Institute for Fiscal Studies, estimates that a 10 percent levy could generate roughly £9 billion a year. His calculation combines two effects: about £3 billion from raising the current 40 percent inheritance-tax rate by one percentage point (each point is estimated to bring £300 million) and an additional £6 billion from applying the levy to estates that are presently exempt. Adam cautions that these figures are “hypothetical” because they ignore behavioural responses—such as families transferring property before death—and the administrative burden of a universal levy. He notes that only 6 percent of estates currently pay inheritance tax, so a universal charge would dramatically increase the number of families facing tax and paperwork.

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Prime Minister Rishi Sunak, speaking on Wednesday, said the public must be prepared for “difficult decisions” and hinted that tax rises may be required to fund social-care reform. He emphasized that the government would first try to do more with existing budgets. The funding plan, however, is tied to the forthcoming review of social-care policy by Baroness Louise Casey, which is expected to be completed next year. Casey rebuffed the notion of a “whole new tax,” telling Radio 4’s *Today* programme that the public is already paying for care and that a brand-new levy is “cloud cuckoo land.”

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Critics argue that the proposed levy would be revenue-neutral at best, matching the amount currently raised by inheritance tax and leaving a shortfall for the full NCS. They also warn of the “extra administrative and record-keeping burden” on families and question the fairness of taxing every estate regardless of size. The Daily Telegraph reported that civil servants are exploring a narrower 1.8 percent income levy on earnings above £6,240 for people over 34 as an alternative.

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The Health Foundation estimates that a scaled-down model—providing at-home personal care similar to Scotland’s system—would cost about £6.5 billion annually, a figure that could theoretically be covered by the 10 percent levy but would fall short of Burnham’s vision for a comprehensive NCS. With Casey’s review pending and the Treasury weighing other levy options, the final funding mechanism for England’s social-care overhaul remains undecided.

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