Badenoch says Tories would scrap inheritance tax on family homes

Badenoch sets out inheritance tax pledge in Conservative conference speech

Ninoda.com – Conservative leader Kemi Badenoch has promised that a future Conservative government would remove inheritance tax from family homes, while increasing the amount couples could pass on tax-free.

Speaking at the party conference in Birmingham, Badenoch said the wider goal would be to eliminate inheritance tax completely when public finances allowed. She said that ambition could not yet be delivered because of spending pressures involving defence, prisons and the economy.

The next Conservative government will legislate so nobody will ever pay inheritance tax on their family home.

Her plan would also allow couples to leave an extra £1m without an inheritance tax charge. Badenoch said the changes would reduce every inheritance tax bill and cut by more than half the number of families who pay the tax.

How the proposed changes compare with current rules

Inheritance tax is paid from the value of a person’s estate after their death. At present, the standard tax-free allowance is £325,000. That threshold can rise to £500,000 where a home is passed to children or grandchildren. Assets above the applicable allowance can be taxed at 40%.

Married couples and civil partners are already able to transfer assets to each other, including unused inheritance tax allowances. Badenoch’s proposal would add a further £1m tax-free allowance for couples and remove the tax liability on a family home.

The Conservatives estimate the policy would cost roughly £6bn each year. The party says it has identified £71bn in possible reductions to government spending, including cuts to welfare, to support its wider plans.

Inheritance tax affects a minority of estates, but its impact has become a significant political issue as property values have risen. In 2023-24, an inheritance tax charge applied in 4.72% of deaths in the UK and raised about £7bn for the government.

Badenoch argued that the levy had moved beyond its original purpose.

It was supposed to be a tax on the super wealthy, but it is now a tax on ordinary middle-class families in every corner of our country.

She said her long-term objective remained the full abolition of inheritance tax.

My ambition is to abolish inheritance tax altogether, as soon as we can afford it.

Message to Conservatives and Reform voters

The inheritance tax announcement came near the close of a 66-minute address at Symphony Hall. Much of the speech was aimed at defining the Conservatives against both Labour and Reform UK after the party’s heavy defeat at the 2024 general election.

Badenoch told members they faced a “battle for the soul” of the country and said the party was rebuilding. With the Conservatives behind Labour and Reform in polling, she acknowledged that public interest had not yet translated into sufficient support.

People are looking through the shop window, they like what they see, but not enough of them are buying yet. We need to fix that.

She compared the task of restoring the party’s appeal with the revival of Marks and Spencer, saying the retailer had adjusted to the modern market and attracted customers back.

Just like M&S, we must learn from our mistakes, win back trust and make people feel good about our party again.

Badenoch also rejected the idea of an electoral arrangement with Reform UK. While describing many Reform voters as people who had once supported the Conservatives, she said the party needed to win them back on its own terms.

The Conservatives have had an export boom of drama queens going to Reform. This party is now the no drama party, we are the no-nonsense party.

After criticising senior Reform figures, she dismissed calls to “unite the right”.

People deserve better than that and we are going to give them better than that. Character, conduct, and standards matter.

She added that she did not want to live in a country led by people who debated whether her mixed-race children were English.

Labour criticism and a wider political test

Labour argued that the inheritance tax proposal would chiefly benefit people with greater wealth. Party chair Bridget Phillipson said Badenoch’s speech showed that the Conservatives had not changed.

The Tories haven’t changed.

The pledge places inheritance tax at the centre of the Conservatives’ attempt to reconnect with voters who feel that rising house prices have brought more families within reach of the charge. But it also raises questions over how the policy would be funded, particularly while Badenoch says a full abolition must wait until it is affordable.

Badenoch used the conference platform to draw a broader contrast between the Conservatives, Labour and Reform. She portrayed her party as practical and disciplined, attacked Reform as a “circus”, and accused Prime Minister Andy Burnham of wanting to “live in the past”. She also called him a “Paddington Bear prime minister” who hoped difficult issues would disappear.

The speech gave Conservatives a clear tax-cutting commitment to defend in future elections. Whether it shifts wider public opinion will depend not only on the appeal of ending inheritance tax on homes, but also on voters’ confidence in the party’s spending plans and its promise of renewal.