Inheritance tax could be abolished if Kemi Badenoch becomes Prime Minister, according to party sources speaking to the Mail on Sunday. This potential move aims to create a stark contrast with the tax increases being implemented by the Labour party.
Prime Minister Andy Burnham recently announced plans for a £1.6 billion 'tourist tax,' a 5% surcharge on Britons vacationing within the UK. This initiative is part of a series of tax and National Insurance hikes since Labour's general election victory in 2024.
Inheritance tax is currently levied at 40% on estates exceeding the £325,000 tax-free threshold. This threshold can increase to £1 million when a primary residence is passed down and when married couples transfer their unused allowances. Abolishing this tax is estimated to cost £9 billion, with potential funding sources identified as cuts to the welfare budget.
The policy could be formally announced at the Conservative party conference in Birmingham next month. Sources close to Badenoch indicated that the policy platform has not yet been finalized, but the idea has echoes of a past Conservative proposal. In 2007, George Osborne announced at the party conference that a future Conservative government would raise the inheritance tax threshold to £1 million. That announcement was credited with influencing public support.
Some aides to Badenoch reportedly hope that such a policy would discourage Burnham from calling an early general election, given the Conservative Party's current lack of preparedness.
Badenoch has previously stated that abolishing the 'death tax' is a high priority and has commissioned internal research to assess its affordability, emphasizing the Conservative commitment to fiscal responsibility. Andrew Griffith, her Shadow Chancellor, has also publicly expressed his dislike for the levy, stating in the past that it is the single tax he would abolish if given the chance. He has also pointed to Sweden's abolition of inheritance tax as a model.
Polling data from the Adam Smith Institute suggests public opposition to inheritance tax, with 45% of Britons opposing it and only 25% supporting it in its current form. Organizations such as the TaxPayers' Alliance and the Adam Smith Institute have advocated for the abolition of inheritance tax, arguing it unfairly penalizes families and businesses, raises minimal revenue, and taxes already-taxed income. A Conservative spokesperson stated that the party has not yet finalized its conference policies and that any claims of knowing the announcements are unfounded. They added that while Badenoch has expressed a desire to cut taxes, particularly inheritance tax, the Conservatives will only announce fully costed policies aligned with their fiscal rules.
