Badenoch Vows to Scrap Inheritance Tax on Family Homes and Lift Couples' Tax-Free Allowance to £1m

Conservative leader Kemi Badenoch used her keynote address at the party's Birmingham conference to promise that a future Tory government would eliminate inheritance tax on family homes and raise the amount couples can pass on tax-free to £1m. Speaking at Symphony Hall, she framed the proposal as a core element of her effort to reposition the Conservatives as a "no-nonsense" force in British politics, distinct from both Labour and Reform UK.

The announcement came at the climax of a 66-minute speech that had been trailed for days by speculation that Badenoch would unveil significant changes to inheritance tax, a levy that is charged on the value of a person's estate when they die. She argued the tax was originally conceived as a burden on the very wealthy but has since crept down the income scale to hit ordinary middle-class households across the country.

Under the current system, estates valued above £325,000—or £500,000 when a home is passed to children or grandchildren—face a 40% tax rate on the assets exceeding that threshold. Married and civil partners are already able to transfer assets between one another. Government figures show that in 2023-24, just 4.72% of UK deaths triggered an inheritance tax charge, generating roughly £7bn for the Treasury.

Badenoch said the next Conservative government would legislate to ensure no one ever pays inheritance tax on their family home, adding that couples would also be permitted to leave an additional £1m tax-free. According to her, these combined measures would mean every inheritance tax bill is reduced and the number of families liable for the tax would fall by more than half.

She also set out a longer-term ambition to abolish inheritance tax entirely, but said she could not currently commit to that because of existing spending obligations in areas such as defence, prisons and the wider economy. The Conservatives estimate the policy package would cost approximately £6bn a year, and party officials believe they have identified £71bn in potential government savings—including through welfare cuts—to cover the expense.

The proposals were immediately attacked by rival parties, who argued they would disproportionately benefit wealthier households. Labour Party chairwoman Bridget Phillipson said the speech demonstrated that the Conservatives had not changed, accusing Badenoch of choosing to do nothing for ordinary families struggling with the cost of social care while prioritising the wealthiest in society.

Reform UK's economy spokesman Robert Jenrick was equally scathing, saying Badenoch had "chickened out of doing anything big" and claiming her party now represents just "the 2%". The former Conservative MP contrasted his party's offer of a £500 tax cut for everyone through raising the tax-free personal allowance to £15,000, arguing that Reform looks after the country while the Tories look after their own in Kensington.

A significant portion of Badenoch's speech was devoted to distinguishing her party from Reform UK, the insurgent force led by Nigel Farage that has drawn support from traditional Conservative voters. She acknowledged that many Reform supporters are "our people", conceding that the Conservatives had let them down and expressing a desire to welcome them back. However, she ruled out any electoral pact with Farage's party, telling the hall that uniting with Reform was not an option.

In a reference to the stream of former Tory figures who have defected to Reform, Badenoch joked that the Conservatives have enjoyed an "export boom of drama queens". She declared that her party is now the "no drama party" and the "no-nonsense party", drawing one of the loudest reactions of the afternoon from the assembled members.

Badenoch also sharpened her attacks on Prime Minister Andy Burnham, whom she accused of wanting to "live in the past". In a series of jibes, she labelled him a "Paddington Bear prime minister" who is hoping that the country's problems will simply disappear on their own.

Addressing the broader political challenge facing her party, Badenoch admitted that the Conservatives remain behind Labour and Reform in the opinion polls. She used an analogy of shoppers looking through a shop window, saying people like what they see but that not enough of them are yet buying—a gap she said the party must close.

She cited Marks and Spencer as her inspiration for reviving a long-established brand, noting that the retailer adapted its style for today's market and has seen customers flood back. Badenoch said the Conservatives must follow the same path by learning from past mistakes, winning back trust and making people feel good about the party again.

The speech also touched on a range of other policies announced in the days leading up to the conference. These included a £10bn anti-missile defence system, the creation of 50,000 new prison places, and a plan to halve the rate of employer national insurance on earnings for workers aged between 21 and 24. The party additionally pledged to scrap the "cliff edge" that causes parents in England to lose childcare support.

Badenoch's inheritance tax pledge forms part of a wider attempt to convince voters that the Conservatives have changed since their historic defeat at the 2024 general election. She described her party as "renewed" and "coming back", telling members they face a "battle for the soul of this nation". Whether the promise of tax relief on family homes will be enough to shift the polls—and to stem the flow of Conservative voters toward Reform UK—remains the central question her leadership now confronts.