Full Breakdown
Kemi Badenoch Pledges to Abolish Inheritance Tax on Family Homes
By Drooid · · How we work
Core Proposal at the Conservative Conference
She added that couples would be allowed to pass an additional £1 million to their children tax-free and that the reforms would “cut every inheritance tax bill” and reduce the number of families paying the levy by “more than half.”
Background & Context
Inheritance tax is levied at 40 % on the value of an estate above £325,000; the threshold rises to £500,000 when a home is left to direct descendants. Married or civil-partner couples can combine allowances, giving a combined exemption of £1 million. In 2023-24, only 4.6 % of estates were subject to IHT, raising roughly £7 billion for the Treasury. The threshold has been frozen for almost a decade, so rising property values are expected to increase the number of liable estates.
Data & Statistics
- 30,400 deaths in 2024-25 left estates liable for IHT (about 5 % of all UK deaths).
- Estates valued at £10 million paid an average effective IHT rate of 18 % (HMRC).
- The Institute for Fiscal Studies estimates the Conservative reforms would cost £6 billion a year in 2029-30.
- The OBR projects IHT revenue of £9.5 billion in 2026-27 and £14.5 billion in 2030-31.
Official Statements & Responses
The OBR warned that IHT will raise 0.3 % of GDP in 2026-27 and 0.4 % of GDP by 2030-31, indicating a substantial revenue impact from any cut. An OECD analysis cited by the Conservatives suggested inheritance taxes are less damaging to growth than taxes on earned income, challenging the party’s claim that IHT is “bad for growth.” Tax experts cautioned that exempting the family home could discourage older people from downsizing, potentially tightening the housing market.
Criticism & Opposition
Executive Director Faiza Shaheen of Tax Justice UK called the plan “reckless,” saying it would take money from the poorest to give to the wealthiest and deprive public services of vital cash.
Conflicting Reports & Gaps
- Revenue forecasts differ: the OBR projects £14.5 billion in 2030-31, while Reuters cites £14.7 billion for the same period.
- Cost estimates vary: the Conservatives cite a £6 billion annual cost in 2029-30, whereas the OBR’s revenue projections imply a larger fiscal impact if the reform were implemented.
These discrepancies highlight uncertainty over the net fiscal effect of the proposed changes.
Verbatim Quotes
- “I believe the people who work hard and save should be rewarded for that effort,” — Kemi Badenoch, TUC general secretary
- “These changes mean every inheritance tax bill will be cut and the number of families paying inheritance tax will fall by more than half,” — Kemi Badenoch, TUC general secretary
- “What is the thing that most people want to pass on to their children and grandchildren? It is their family home,” — Kemi Badenoch, TUC general secretary