The scheme would enable pensioners facing increasing council tax bills to avoid or defer their local tax bill each month until they die. It would then be collected from the sale of their property.
Concerns were raised when it came to light that a similar proposal was put out to consultation in Northern Ireland in 2004 and political representatives for the opposition are already calling the plan a ‘sinister death tax’.
There are fears that pensioners will feel pressured into the scheme by rising monthly payments they cannot cope with, therefore sacrificing their children’s inheritance.
The Lyons report, headed by former chief executive of Birmingham council, Sir Michael Lyons, was commissioned to explore the future of local government finance and taxation in England. The paper is due to be published later this year when Lyon’s taxation recommendations will be revealed.
A spokesman at the Office of the Deputy Prime Minister dismissed any claims that England would follow suit, claiming that there was no reason why it should and that it was solely a matter for Northern Ireland. However, it has come to light that Lyons has considered the scheme in his review.
Brian Murphy, head of lending at the Mortgage Advice Bureau, said any scheme would have similar connotations for equity release. He said: “There would have to be a legal agreement to allow the council to recoup the debt after death.
“A problem could occur upon death if the property is bequeathed to the next-of-kin and the value has been eroded by a council tax repayment.”
