Story perspectives

Badenoch Proposes £500,000 Inheritance Tax Threshold, IFS Warns

By Drooid · Oct 7, 2026, 10:57 PM UTC · How we work

Left

£6bn inheritance tax loss

Kemi Badenoch announced at a Conservative conference in Birmingham on 7 Oct 2026 that the inheritance-tax threshold will be raised to £500,000 for individuals, homes will be exempt, and couples will receive a £1 million tax-free allowance.
The Institute for Fiscal Studies says the reform would cut inheritance-tax revenue by £6 billion, hurting public-service funding.
Since 5% of estates pay inheritance tax, the reform would halve liable families.
Arun Advani warns the reform could keep wealthy owners in homes, limiting supply for families.

Right

Affordability of tax cuts

At the Conservative conference in Birmingham on 7 Oct 2026, Kemi Badenoch announced raising the inheritance-tax threshold to £500,000 for individuals, exempting homes and adding a £1 million allowance for couples.
Badenoch framed the reform as a safeguard for ordinary middle-class families’ homes across the country.
She said inheritance tax burdens ordinary middle-class families and abolishing it is unaffordable.
The reform ties to plans to scrap stamp duty and a mansion tax on homes.

History

Historical Context

The 2006 Finance Act, introduced by Chancellor Gordon Brown, raised the inheritance-tax nil-rate band to £285,000, a step later expanded by the 2007 transferability reform and the 2015 Residence Nil-Rate Band that now lets couples shelter up to £1 million. At the 2024 Conservative conference, Kemi Badenoch invoked those changes while urging a £500,000 threshold, citing similar revenue-loss worries.

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£6bn inheritance tax loss

Kemi Badenoch announced at a Conservative conference in Birmingham on 7 Oct 2026 that the inheritance-tax threshold will be raised to £500,000 for individuals, homes will be exempt, and couples will receive a £1 million tax-free allowance.
The Institute for Fiscal Studies says the reform would cut inheritance-tax revenue by £6 billion, hurting public-service funding.
Since 5% of estates pay inheritance tax, the reform would halve liable families.
Arun Advani warns the reform could keep wealthy owners in homes, limiting supply for families.

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