Key facts
- Kemi Badenoch pledged to scrap inheritance tax on family homes.
- Couples would be able to leave an additional £1 million tax-free.
- The changes aim to cut every inheritance tax bill and reduce the number of families paying it by more than half.
- The policy is estimated to cost around £6 billion a year.
- Badenoch described the Conservative Party as the 'no-nonsense party'.
- The current inheritance tax threshold is £325,000, or £500,000 if a home is left to children or grandchildren.
Conservative Party leader Kemi Badenoch has pledged significant changes to inheritance tax (IHT) if her party wins the next election. In her keynote speech at the party's conference in Birmingham, Badenoch announced plans to scrap IHT on family homes and increase the tax-free allowance for couples to £1 million. She also expressed an ambition to abolish IHT entirely in the long term, but stated this was not currently feasible due to other spending commitments.
Badenoch positioned the Conservatives as the 'no-nonsense party,' contrasting them with Labour and Reform UK. She described Reform UK as a 'circus' and criticized Prime Minister Andy Burnham as a 'Paddington Bear prime minister.' She also indicated no desire for an election deal with Reform UK, stating that while many Reform voters are 'our people' who have been let down, the Conservatives would not unite with 'drama queens.'
The proposed IHT changes, estimated to cost £6 billion annually, were met with criticism from rival parties. Labour Party chairwoman Bridget Phillipson stated the proposals prioritize the wealthiest and do nothing to help ordinary families struggling with the cost of social care. Reform UK's Robert Jenrick called the plans 'handouts to multi-millionaires' and claimed Reform would offer a £500 tax cut to everyone. Liberal Democrat leader Sir Ed Davey accused Badenoch of making 'tens of billions in unfunded promises' while lecturing on fiscal responsibility, and Green MP Carla Denyer characterized the Conservatives as 'pro-billionaires' and 'pro-inequality.'
Under current rules, estates worth over £325,000, or £500,000 if a home is left to children or grandchildren, can be subject to a 40% IHT rate on assets above the threshold. In 2023-24, IHT charges were levied on 4.72% of UK deaths, raising approximately £7 billion for the government. Badenoch also referenced other party policies, including a £10 billion anti-missile defence system, 50,000 new prison places, and the scrapping of the High Value Council Tax Surcharge.