Kemi Badenoch has proposed cutting inheritance tax in a move that would cost about £6bn and remove about half of projected inheritance tax revenue. Ruth Davidson is the display keyword attached to the story, but the policy itself centres on a plan that would leave the biggest gains with households inheriting high-value property.
The plan comes as inheritance tax revenue is forecast at about £9bn this year and £15bn by 2030-31. Less than 5% of estates were liable for any inheritance tax at all in 2023/24, yet Badenoch’s proposal would allow a couple to pass on the family home without tax on it and add £1m in other assets.
Kemi Badenoch and IHT revenue
The numbers point to a simple trade-off. If the plan costs £6bn against a forecast £9bn in receipts, it would remove roughly two-thirds of this year’s inheritance tax take; against the 2030-31 forecast, it would wipe out about 40% of revenue.
Current rules already allow a married couple to pass on property worth up to £1m to children or grandchildren without inheritance tax. Badenoch’s proposal would go further by taking the family home out of IHT entirely and adding an extra £1m in other assets.
Arun Advani at University of Warwick
Arun Advani of the Centre for the Analysis of Taxation at the University of Warwick said the biggest beneficiaries would be in places where housing is expensive. He put it this way: “Where housing is expensive’ mostly means ‘where lots of people want to live".
That points to the practical effect of the plan: the households most likely to benefit are those with valuable homes and larger estates, not the broad mass of taxpayers who never pay IHT. In 2023/24, fewer than 5% of estates were liable for any inheritance tax at all.
George Osborne and Rachel Reeves
The policy also echoes earlier Conservative thinking. George Osborne pledged in 2007 to “take the family home out of inheritance tax”, with a £1m threshold, but the Conservative-Lib Dem coalition came to power in 2010 before that plan happened.
Rachel Reeves later reformed the inheritance tax regime for family businesses and farms, prompting tractors to stream down Whitehall in response. Badenoch’s proposal sits in the same tax area, but the article frames it as politically attractive because IHT is unpopular and economically hard to justify.
The Tories said they would also abolish stamp duty, linking the two changes together. The combined effect on housing transactions is not quantified, but the package would reduce the incentive for older homeowners to downsize and could leave fewer family-size homes coming onto the market in expensive areas.
