Badenoch promises inheritance tax changes as Conservatives target traditional voters

Kemi Badenoch has promised that a future Conservative government would abolish inheritance tax on family homes and allow couples to leave an additional £1m to their families without tax. The Conservative leader made the pledge in her conference speech in Birmingham as she sought to rebuild support among the party’s traditional voters. Badenoch said she wanted ultimately to abolish inheritance tax altogether, but added that this could happen only “as soon as we can afford it”.

She said current spending commitments, including defence, prisons and the economy, meant she was not proposing a complete abolition immediately. The Conservatives estimate that the announced changes would cost about £6bn a year. The party says the number of families paying inheritance tax would fall by more than half and that the cost could be met through identified savings, including reductions in welfare spending.

It says it has identified £71bn of potential savings overall. Under current rules, estates valued above £325,000, or £500,000 when a home is left to children or grandchildren, can face a 40% tax rate on the value above the threshold. Married couples and civil partners can transfer assets between one another.

BBC figures show that 4.72% of deaths resulted in an inheritance tax charge in 2023-24, raising about £7bn. The proposal drew criticism that its main beneficiaries would be wealthy homeowners. The Institute for Fiscal Studies economist Stuart Adam told the Guardian that those with the highest wealth and most valuable homes would benefit most, particularly in London and south-east England.

Tax Justice UK called it a giveaway to some of the country’s wealthiest people. Labour chair Bridget Phillipson said the Conservatives were prioritising wealthy households rather than families facing social-care costs. Reform UK’s finance spokesperson, Robert Jenrick, said the plan was aimed at only a small share of properties, mostly in London, and contrasted it with Reform’s proposal to raise the tax-free personal allowance to £15,000.

Badenoch presented the policy as part of a wider attempt to restore the party’s economic identity. She also mentioned removing stamp duty on homes, repealing mansion tax, reducing planning restrictions, building a third runway at Heathrow and adopting a new energy policy. Support for childcare for people earning more than £100,000 was among the other measures reported this week.

The speech also marked a refusal to cooperate electorally with Reform UK. Badenoch appealed to voters who had moved to Nigel Farage’s party, saying the Conservatives wanted them to return, but rejected calls to unite the right. With the Conservatives trailing Labour and Reform in polls, she acknowledged that voters were examining the party but that too few had yet chosen to support it.