The new PM previously supported the idea of replacing Inheritance Tax with a 10% levy on all estates to pay for free social care13:25, 28 Jul 2026Updated 13:25, 28 Jul 2026Andy Burnham is rumoured to be considering a new "death tax" to raise billions of pounds for adult social care.‌While appointed as health secretary under Gordon Brown between 2009 and 2010, Mr Burnham supported the idea of replacing Inheritance Tax with a 10% levy on all estates to pay for free social care.‌Asked whether he still backs this idea, the his official spokesperson said: “I’m just not going to get ahead of his update on this issue, which will come later in the week.‌“And he has said in his interview today that creating a new system will take time. But 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.“The new PM is set to deliver a speech on social care this Wednesday but warned in a recent interview with the BBC that he "couldn't put a timeline on it right here, right now".‌The BBC reports that instead of introducing immediate changes now, the PM could announce that he is speeding up the Casey Commission, an independent review into adult social care.How does Inheritance Tax work right now?Very few families currently end up having to pay Inheritance Tax due to several rules and allowances that are in place.In the UK, approximately 31,500 estates incur an Inheritance Tax charge annually.‌Inheritance Tax is due on estates that are worth over £325,000. The standard rate is 40% on the value above this amount.However, this threshold can often be much higher depending on who you leave your estate to. For example, there is no Inheritance Tax to pay when an estate is left to your spouse or civil partner.If you give away your home to your children or grandchildren, then you get an additional £175,000 allowance. This therefore increases your overall Inheritance Tax threshold to £500,000.‌If you are married or in a civil partnership, any Inheritance Tax allowance that isn’t used can be passed on when someone dies.This means a couple can potentially pass on as much as £1million without their estate being subject to Inheritance Tax. There are also ways to reduce how much Inheritance Tax is paid on your estate.Your rate of Inheritance Tax on some assets is reduced from 40% to 36% if you leave at least 10% of the net value after any deductions to a charity in your will.‌If you give a gift and you live for more than seven years after, this is generally exempt from Inheritance Tax as long as it is not part of a trust.The seven-year rule does not apply if you give away an asset but still benefit from it - for example, if you gift a property but you still live in it and do not pay market rent.How would a 10% 'death tax' work?If a 10% levy on estates was introduced, it would mean someone that has an estate valued at £100,000 would pay £10,000.‌In comparison, Inheritance Tax is currently only due on estates that are worth £325,000. Those with higher valued estates would pay more under a universal 10% levy.For example, under current Inheritance Tax rules, an estate valued at £400,000 and with no exemptions would pay £30,000 - but with a 10% levy, the tax bill would be £40,000.Inheritance Tax is changingMore families will be dragged into paying Inheritance Tax from next year when pensions will be included for the first time.‌Under current rules, if you die before the age of 75, the person inheriting your pension will not have to pay tax on your retirement savings.If you die after the age of 75, those who inherit your pension will pay Income Tax when they draw from it, as it will be treated as income.But from April 2027, inherited pensions will become subject to Inheritance Tax and included in the value of someone's estate.Article continues belowThe Government estimates that 10,500 estates will become liable for Inheritance Tax on unused pension funds, while 38,500 estates will pay a higher amount than under previous rules.