Conservative leader Kemi Badenoch has pledged to eliminate inheritance tax on family homes, signaling a return to the party's emphasis on lower taxes and home ownership. Speaking at the Conservative Party Conference, Badenoch announced plans to scrap stamp duty on home purchases, eliminate a proposed 'mansion tax,' and exempt main residences from inheritance tax when passed down through generations.
These proposals are part of a broader strategy aimed at regaining voters lost to other parties and preparing for a potential snap election. The inheritance tax pledge alone is expected to cost £6 billion, which the party intends to fund through cuts to the welfare budget. Badenoch stated that under Conservative plans, couples would be able to pass on an additional £1 million in assets tax-free, effectively exempting the family home from the levy regardless of its value.
The Conservative plan contrasts with Labour's approach, which has extended a freeze on inheritance tax thresholds and is considering lowering the threshold for a 'mansion tax.' Labour has also proposed allowing councils to seize unoccupied private homes. Badenoch criticized Labour's policies, accusing them of fostering a 'tax doom loop' and being 'addicted to welfare.'
Badenoch's speech also addressed broader political themes, including a call to Reform voters, a commitment to increasing defence spending to 3% of GDP, and a hardening of stances on law and order, including plans for 50,000 additional prison places. She also strongly criticized recent comments from some Reform politicians regarding national identity, stating, "I don't want to live in a country run by people who threaten journalists, call veterans traitors and debate whether my mixed-race children are English."
The inheritance tax reform aims to address the increasing number of middle-class families affected by death duties. Currently, individuals can leave £325,000 tax-free, with an additional £175,000 if the family home is involved, allowing couples to pass on £1 million without tax. Under the proposed Conservative plan, the family home would be exempt, and individuals could leave an additional £500,000 tax-free, enabling couples to pass on £1 million in assets in addition to their home.
The proportion of estates liable for inheritance tax is projected to rise significantly by 2030 due to property value growth, with estimates suggesting it could affect up to 16.5% of families. Badenoch argued that the tax, originally intended for the super-wealthy, has become a burden on ordinary families. She vowed that a Conservative government would legislate to ensure that "nobody will ever pay inheritance tax on their family home."