Are Tories plotting death tax to fund care?

THERESA May last night signalled that the Tories are preparing to include a ‘death tax’ in their manifesto to pay for care home places.

The Prime Minister will unveil the document within days following a series of delays and behind-the-scenes disagreements.

Yesterday she refused to rule out including a rise in post-death taxes to fund social care – despite the move apparently being rejected by the Chancellor just two months ago.

As he presented his Budget in March, Philip Hammond told MPs: ‘For the avoidance of doubt, those options do not include, and never have included, a death tax.’

But yesterday Tory sources said he was referring specifically to an axed Labour plan to bring in a flat 10 per cent social care levy on all estates. During a campaign trip to the North East, Mrs May also indicated that she would be forced to make difficult decisions in the party’s manifesto.

In a speech in Tynemouth, she said: ‘Next week when we release our manifesto... we will be straight with people about the tradeoffs we must sometimes make, because that is what leadership is all about.’

When asked by the Daily Mail to absolutely rule out any rise in post-death taxes to pay for social care, Mrs May refused.

‘We absolutely recognise the pressure on social care. We do face the challenge of an ageing population and how we provide for that ageing population,’ she said.

‘There is a long term issue about the sustainability of social care. Obviously we’ll be publishing our manifesto next week, and I am afraid if you want to know what is in it you will have to wait.’

Any move to raise taxes on people’s estates when they die could lead to claims of hypocrisy, after the Tories savaged the Labour proposal when it was put forward in 2010.

The party put up billboards across the country showing a tombstone engraved with ‘RIP off’ and the warning: ‘Now Gordon wants £20,000 when you die. Don’t vote for Labour’s new death tax.’ Stuart Adam, from the Institute for Fiscal Studies, said the Government has a range of options to raise money which could include small tweaks to inheritance tax or a radical overhaul.

One option could be a compulsory levy to be taken out of people’s estates when they die – whether or not they needed social care – to help fund a cap on care costs. At present, people pay the full cost of their social care until their assets are reduced to £23,000.

The Tory manifesto had been expected last Monday, but has been repeatedly pushed back amid claims there has been feuding between Mrs May’s ministers.

Last month during a trip to the US, Mr Hammond appeared to rule out repeating David Cameron’s 2015 pledge not to raise VAT, income tax or national insurance.