Conservative leader Kemi Badenoch has announced plans to overhaul inheritance tax if her party wins the next general election. She stated at the Conservatives' annual conference that "nobody will ever pay inheritance tax on their family home" and that couples would be able to leave an additional £1m tax-free.
Under the proposed plan, the current inheritance tax threshold of £325,000 would increase to £500,000, and a family home would be fully exempt from the tax. Currently, inheritance tax of 40% is applied to estates exceeding £325,000, with additional transferable allowances for a family home when left to direct descendants.
Tax experts have described the party's estimated cost of £6bn per year for the plan as reasonable. However, they caution that the policy would primarily benefit wealthier households and could discourage older people from moving to smaller homes.
Official figures show that around 30,400 deaths in the UK in 2024-25 left estates liable for inheritance tax, representing about 5% of all UK deaths that year. The Institute for Fiscal Studies (IFS) estimates that by 2032-33, around 12% of people will have inheritance tax due.