Conservative leader Kemi Badenoch's flagship tax policy announced at the Tory conference on October 7 would benefit just 2% of UK households, according to analysis. Speaking at the event, Badenoch said "nobody will ever pay inheritance tax on their family home", and couples will be able to leave an additional £1m tax free.
Currently, inheritance tax of 40% is paid when an estate exceeds £325k. When a person dies, they can transfer the tax-free allowance to a spouse or partner, increasing the combined threshold for a couple to £650k. On top of that, individuals can get a transferable allowance for a family home of £175k each when it is left to children or descendants. At present, most married couples can potentially leave £1m without paying inheritance tax.
Reform criticises the plan
The Conservatives would increase the £325k threshold to £500k and exempt a family home from inheritance tax. Yet just 2% of houses, the majority in London, will benefit from this plan. Reform shadow chancellor Robert Jenrick argued: "The Tory Party is looking after its own in Kensington, Reform is looking after the country."
Badenoch's latest move represents another U-turn from the Tory leader. In 2021, she announced, as Boris Johnson's Treasury Minister, that inheritance tax thresholds would be frozen, raking in £3bn from estates and dragging thousands of extra families into paying tax.
Badenoch's record under scrutiny
Badenoch was Minister for Equalities from 2020–22 and was responsible for such things as the Equality Act and equality policy. Yet she now proposes abolishing the Public Sector Equality Duty, arguing it has been used to promote "divisive agendas".
As a Tory minister, Badenoch was part of the government which presided over high levels of immigration. Yet she now advocates for a cap on immigration and attacked the previous Tory government's record, a government she served in. In 2018 Badenoch even supported looser immigration controls.
As Business Secretary, Badenoch stopped automatic scrapping of EU-derived laws, despite pressure from Tory Eurosceptics. She said at the time she was a Conservative, not an "arsonist". Yet she subsequently criticised aspects of the Tory government's Brexit record and repositioned the Conservative party on the issue.
Net zero and the path forward
On net zero, while Business Secretary in 2024, Badenoch defended the government's decarbonisation policy and said: "This House voted to reach net zero by 2050." She defended the decarbonisation of Port Talbot steelmaking as part of that process. Now apparently, she's a critic of net zero.
By contrast to the Conservatives' latest gimmick, Reform has said it will abolish inheritance tax, but it is not a top priority. Instead, Robert Jenrick said he would raise the tax-free personal allowance to £15k, funded by £80bn in spending cuts. As Jenrick argued: "While the Tory Party is offering handouts to multi-millionaires, Reform will give everyone a £500 tax cut by raising the tax-free personal allowance to £15,000."
Badenoch is asking voters to trust her to fix the very problems caused by a government she happily served in. In certain cases, she was the minister responsible. Voters will ask why the Tories didn't fix all this last time and why Badenoch has U-turned so many times.
