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Archive photograph, for illustration. Kemi Badenoch at a political cabinet meeting in Downing Street.

Conservatives propose inheritance tax exemption for family homes

Archive photograph, for illustration. Kemi Badenoch at a political cabinet meeting in Downing Street. · 2024 · The Conservative Party · CC BY 2.0
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Kemi Badenoch wants to exempt family homes from inheritance tax if the Conservatives win power. The IFS says the biggest gains would go to the wealthiest households.

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Conservative leader Kemi Badenoch has proposed removing family homes from inheritance tax and raising the basic tax-free threshold from £325,000 to £500,000 if her party wins the next general election. The plan would not change the law unless the Conservatives return to power. [1]

Inheritance tax is currently charged at 40% on the part of an estate above its applicable tax-free allowances. A basic allowance can pass to a surviving spouse or civil partner. A further £175,000-per-person allowance can apply when a home is left to direct descendants. Together, those allowances mean most married couples can potentially leave £1m tax-free already. Badenoch’s proposal would go further by exempting a family home from the tax altogether. [1]

Official figures cited by the BBC show that about 30,400 UK deaths in 2024–25 left estates liable for inheritance tax, around 5% of all deaths that year. Citing Oxford Economics, the Conservatives say 52,100 estates would pay the tax in 2029–30 without the reform. The party estimates its plan would reduce the number affected to 22,000 in 2030; those forecasts cover differently stated periods. [1]

The Conservatives estimate the plan would cost £6bn a year in 2029–30. The Institute for Fiscal Studies says the biggest beneficiaries would be people with the greatest wealth and most valuable homes, and their descendants, mainly in London and south-east England. [1]

The Conservatives say they have identified £71bn a year in savings, including £36bn from welfare cuts. Andy Summers, director of the Centre for the Analysis of Taxation, argues that an unlimited exemption for homes could discourage older owners from moving to smaller properties. [1]

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