Millions of Brits Could Be Hit by New 'Death Tax' Under Andy Burnham's Plan

Millions of people across Britain could end up paying tax when someone dies under plans being considered by Prime Minister Andy Burnham as part of a major overhaul of the social care system. The proposal would replace the current inheritance tax with a flat 10 per cent levy on all estates after death, with the money helping to fund a new National Care Service that could cost up to £18.7 billion each year.

Downing Street has declined to rule out the idea, with the Prime Minister expected to provide more details later this week. Burnham has argued that reforming social care is essential to prevent the NHS from becoming overwhelmed, while opposition parties have criticised the proposal. The plan has already attracted criticism from the Conservatives and Reform UK, who argue it could leave millions more families paying tax when a loved one dies.

Social Care Funding Plans

The proposed levy would mark a major change to the way inherited wealth is taxed in Britain. Unlike the current inheritance tax system, which only applies to estates above certain tax-free thresholds, a flat 10 per cent charge could apply to every estate after death. That could mean millions more families would have to pay tax when passing on assets.

The money raised would help fund a new National Care Service, which is estimated to cost up to £18.7 billion a year.

Downing Street refused to confirm whether the Prime Minister still supported the proposal when questioned on Monday.

Mr Burnham's official spokesman said: 'I'm just not going to get ahead of his update on this issue, which will come later in the week.'

The spokesman added: 'He's also been clear about the consequences of not doing it, which is that the NHS would collapse under the weight of having to care for people not really needed in the NHS system.'

Burnham first suggested replacing inheritance tax with a 10 per cent levy on all estates in 2009 while serving as health secretary under Gordon Brown. The proposal was later abandoned after the Conservatives labelled it a 'death tax', a description that proved politically damaging.

Despite that setback, Burnham has continued to raise the idea of using inherited wealth to pay for social care. During the Makerfield by-election campaign in June, he told reporters that he would 'look at all of the kind of implications' surrounding inheritance tax and care funding.

Speaking at a conference two years earlier, he also argued that inheritance tax should be changed so that people with greater wealth and more valuable assets contributed more towards the cost of care.

The Prime Minister is expected to provide an update on his plans later this week.

In his first major interview since entering Downing Street, Mr Burnham repeated his warning that urgent reform was needed.

He stated, 'If we don't do it, the NHS will collapse under the weight of trying to care for people who've really not needed to end up in the NHS system.'

The Prime Minister also said he would use 'whatever political capital I have' to secure meaningful change and that he would not want to leave office without delivering 'substantial' social care reform. While he did not give a firm timetable, he said 'major changes' could be introduced during the three years remaining before the next general election.

Mr Burnham has previously called for a 'conversation with the public' about how care should be funded as Britain's population ages.

Opposition Mounts Against Proposal

The proposal has already prompted strong criticism from opposition parties, who argue it would unfairly affect families that have spent years saving for future generations.

Shadow chancellor Sir Mel Stride said: 'Britain cannot afford another Labour tax rise. If Andy Burnham wants to find money, he should cut the welfare bill.'

He also accused the Prime Minister of 'taking aim at people who have worked, saved and invested to leave a legacy for their children.'

Sir Mel added: 'Whoever leads the Labour Party, they are always looking for more ways to tax hardworking people. Only the Conservatives will deliver an economic revolution, cutting taxes and spending and getting Britain working again.'

Reform UK leader Nigel Farage also criticised the proposal, saying the Government had no electoral mandate to introduce it and arguing it would 'disproportionately hit those who earned modestly but saved hard.'

He described the plan as 'a tax on the lower-middle classes who have already spent a lifetime paying into the system' and pledged that Reform UK would 'fight a death tax every step of the way.'

Under the current system, married couples and civil partners can potentially pass on as much as £1 million to their children without paying inheritance tax. Tax is generally charged only on the part of an estate above the available tax-free allowances.

Inheritance tax currently raises almost £9 billion a year for the Treasury, while government spending on social care is forecast to reach £39 billion by the end of the decade.

Burnham also inherited an independent review of social care that was established by his predecessor, Sir Keir Starmer, in January 2025. The commission, led by Baroness Casey, is carrying out its work in two stages, with recommendations for short-term improvements expected later this year and wider proposals for funding reform due in 2028.

The previous government also extended inheritance tax to agricultural assets for the first time. Agricultural holdings worth more than £2.5 million are now subject to the tax after the original £1 million threshold was raised following opposition from rural MPs and farming groups. Industry bodies warned that the policy could force families to divide or sell farms, while closures of rural businesses reached record levels last year.