Andy Burnham’s Inheritance Tax Plan: What Could Change?

Prime Minister Andy Burnham has accelerated the review of England’s social-care system and started cross-party talks, but he has not announced a 10% estate levy or confirmed that inheritance tax will be replaced. The idea remains a possible funding model based on his earlier proposals, not settled government policy.

→ 29 July 2026: Burnham asked for the social-care review to be completed a year earlier and launched cross-party discussions about reform and funding.

→ 28 October 2026: The next Budget is a key date to watch, although there is no guarantee that an inheritance tax replacement will be included.

What is Andy Burnham’s Inheritance Tax Plan?

The phrase “Andy Burnham’s inheritance tax plan” mainly refers to an earlier proposal to replace the existing inheritance tax system with a flatter contribution linked to social-care funding.

Burnham has previously advocated a National Care Service funded partly through a 10% care levy on estates, potentially applying to assets, homes and savings after death. However, Grant Thornton noted that he did not repeat this proposal in his 29 June 2026 economic speech.

His latest social-care speech did not specify an inheritance tax rate, threshold or exemption. Instead, Burnham said the review should consider different versions of a National Care Service and how each option could be funded.

The accurate position is therefore:

A 10% estate levy is being discussed as a possible approach based on Burnham’s previous views, but it is not yet a formal government tax proposal.

How Does Inheritance Tax Work Now?

Under the current system, inheritance tax is generally charged at 40% on the taxable part of an estate above the available thresholds.

The basic nil-rate band is £325,000. A further residence nil-rate band of up to £175,000 may apply when a qualifying home is passed to children or grandchildren. That can give one person a total threshold of up to £500,000. Unused allowances may be transferred between spouses or civil partners, potentially allowing a qualifying couple to pass on up to £1 million before inheritance tax becomes due.

Transfers to spouses or civil partners are normally exempt, while charitable gifts and certain business or agricultural assets can also receive favourable treatment.

Despite the 40% headline rate, relatively few estates pay inheritance tax. HMRC figures show that 4.72% of UK deaths resulted in an inheritance tax charge in 2023–24. The average effective rate among taxpaying estates was 13% after allowances, reliefs and exemptions were taken into account.

How Could a Flat 10% Levy Change Estate Bills?

A lower rate does not necessarily mean a lower bill for everyone.

The decisive questions would be:

• whether the levy applied from the first pound;
• whether there would be a tax-free threshold;
• whether homes received special treatment;
• whether spouse exemptions continued;
• whether Business Relief and Agricultural Relief survived;
• whether the levy replaced inheritance tax completely or operated alongside another tax.

Without those details, claims that the proposal would automatically reduce or increase tax are premature.

Illustrative Comparison

The following examples assume one person dies with a home passing to a direct descendant, the full £500,000 combined threshold is available, and there are no debts, gifts, charitable exemptions or business reliefs.

The hypothetical levy assumes 10% is charged on the entire estate with no tax-free allowance. That is an illustration, not an official government calculation.

Estate value	Approximate current IHT	Hypothetical 10% levy	Possible difference
£400,000	£0	£40,000	£40,000 more
£750,000	£100,000	£75,000	£25,000 less
£1 million	£200,000	£100,000	£100,000 less
£2 million	£600,000	£200,000	£400,000 less

This shows the central trade-off. A broad 10% charge could bring many estates into the system for the first time, while reducing the headline liability on some larger estates.

A future policy could produce very different results if it included thresholds, progressive rates or exemptions.

Who could Gain or Lose?

Smaller and Medium-sized Estates

Families whose estates currently fall below the inheritance tax thresholds could lose if a new levy applied universally.

This group could include homeowners who are not wealthy by income but own property that has risen substantially in value. A broad levy could also affect beneficiaries who expected to inherit a home or savings without an inheritance tax bill.

Larger Estates

Some wealthier estates could pay less if the current 40% marginal rate were replaced by a flat 10% charge.

However, the comparison would depend on the estate’s existing use of spouse exemptions, trusts, charitable gifts and business or agricultural reliefs. HMRC data shows why the 40% headline rate can be misleading: the effective rate paid by estates is often considerably lower.

Unmarried Couples

Unmarried partners do not receive the same inheritance tax exemption as spouses and civil partners. Their position under any replacement levy would therefore be an important design issue.

A new system could simplify their treatment, but no such protection has been announced.

What Could the Plan Mean for Small-business Owners?

For business owners, the rate is only part of the question. The treatment of company shares, trading assets and commercial property could be more important than whether the levy is set at 10% or 40%.

Business Relief Remains the Critical Unknown

From 6 April 2026, qualifying business and agricultural property can receive 100% relief up to a combined allowance of £2.5 million. Qualifying value above that amount generally receives 50% relief. An unused allowance may also be transferred from a deceased spouse or civil partner, potentially increasing the available allowance to £5 million.

Eligible assets can include an interest in a trading business and shares in an unlisted company. Investment businesses and some property-holding activities do not normally qualify.

If a care levy replaced inheritance tax but removed Business Relief, some family firms could face a new liability even at a lower rate. Conversely, retaining reliefs could protect trading businesses while broadening the levy elsewhere.

No decision has been announced.

Succession and Control

An estate containing valuable company shares may have limited cash. A levy could therefore create a liquidity problem even when the underlying business is profitable.

The executors or beneficiaries might need to:

• use insurance proceeds;
• borrow against the business;
• arrange instalments;
• extract company cash;
• or sell part of the shareholding.

That could reduce family control or disrupt a carefully planned succession.

Business owners should therefore consider the ownership of shares, shareholder agreements, wills and available cash together rather than treating inheritance tax as a separate personal issue.

Wider Wealth Taxes May Also Matter

Burnham has argued more broadly that the tax burden should move away from work and towards assets and wealth. His earlier support for land value taxation means property-owning businesses may need to monitor more than inheritance tax alone. Grant Thornton also identified capital gains tax, land and other asset-based taxes as potential areas of review.

Our guide to Andy Burnham’s land tax proposals explains how those ideas could affect homeowners and commercial property. The wider debate also reflects concerns about how far the Government can rely on higher taxes on wealth and high earners without affecting investment and growth.

Why is Inheritance Tax Reform Linked to Social Care?

Burnham’s policy argument is that families currently face unpredictable care costs while the NHS and local authorities struggle with an underfunded and fragmented system.

His proposed National Care Service would apply in England and would be more closely integrated with the NHS. The Government has asked the Casey review to examine different levels of provision, from a limited model to a more extensive national service, and to consider how each version would be paid for.

Inheritance tax, however, is a UK-wide tax. Any attempt to use a replacement estate levy to fund an England-only service would therefore require decisions about Scotland, Wales and Northern Ireland, revenue allocation and devolved responsibilities.

None of those arrangements has been published.

What Must Happen Before the System Changes?

A newspaper report or ministerial comment does not change tax law.

A major reform would normally require a formal government proposal, Treasury costing, consultation, draft legislation, parliamentary approval and a confirmed commencement date. Transitional provisions would also be needed for gifts, trusts, deaths occurring around the changeover date and existing succession arrangements.

The Budget on 28 October 2026 may provide a clearer direction, but the accelerated social-care review is likely to remain central to the final funding decision.

What Should Business Owners Do Now?

Business owners should plan under the rules that currently exist while preserving enough flexibility to respond to future changes.

Review:

1. who owns the company shares and other business assets;
2. whether the business currently qualifies for Business Relief;
3. wills, trusts and shareholder agreements;
4. the estate’s access to cash;
5. life insurance and succession funding;
6. recent business or property valuations;
7. the effect of unused pension funds entering inheritance tax from 6 April 2027.

Do not make irreversible gifts, transfer shares or sell assets solely because of speculation about a 10% levy. Tax, legal and commercial consequences must be considered together.

Conclusion

Andy Burnham’s inheritance tax plan could eventually replace the current system with a broader levy designed to fund social care. But the Government has not confirmed the rate, threshold, assets covered, exemptions, reliefs or implementation date.

A universal 10% charge could make more modest estates liable while reducing the tax paid by some larger estates. For small-business owners, the treatment of Business Relief, company shares and estate liquidity will be more important than the headline rate.

For now, the practical response is to review succession arrangements and current relief eligibility without restructuring an estate around an unconfirmed proposal.

FAQs

Has Andy Burnham abolished inheritance tax?

No. Inheritance tax remains in force. Burnham has previously discussed replacing it, but the Government has not announced legislation abolishing the current system.

Is the 10% estate levy confirmed?

No. The 10% figure comes from Burnham’s previous care-funding proposals. His July 2026 social-care speech did not announce a levy, threshold or commencement date.

Would every estate pay the levy?

That is not known. A levy applying to every estate is one possible interpretation of the earlier proposal, but the Government has not confirmed whether there would be thresholds or exemptions.

Could company shares be included?

Potentially. Company shares form part of an estate under current inheritance tax rules, although qualifying trading-company shares may receive Business Relief. The treatment of shares under a replacement levy is unconfirmed.

Would Business Relief continue?

No decision has been announced. Retaining, restricting or removing Business Relief would materially change how the proposal affected family companies.

When could the inheritance tax changes begin?

There is no confirmed start date. The 28 October 2026 Budget may provide more information, while the social-care review and subsequent legislation would also need to be completed.

Should business owners give assets away now?

Not solely because of this proposal. Gifts can affect control, capital gains tax, inheritance tax and the donor’s financial security. Obtain regulated tax and legal advice before acting.