Badenoch Vows to Scrap Inheritance Tax on Family Homes in Pitch to Rebuild Tory Brand

Conservative Party leader Kemi Badenoch used her keynote address at the party's annual conference in Birmingham to announce significant changes to inheritance tax, pledging that a future Conservative government would legislate so that no one pays the tax on their family home. She also committed to allowing couples to leave an additional £1 million free of inheritance tax, a move the party estimates would cut inheritance tax bills across the board and reduce the number of families liable for the tax by more than half.

Speaking at Birmingham's Symphony Hall, Badenoch framed the policy as a corrective to what she described as a tax that has drifted far from its original purpose. Inheritance tax, she argued, was "supposed to be a tax on the super wealthy" but has become "a tax on ordinary middle-class families in every corner of our country." Under the current system, estates valued above £325,000 — or £500,000 when a home is passed to children or grandchildren — are subject to a 40% rate on the value exceeding those thresholds. Married and civil partners can transfer assets between one another, which can affect the final liability.

Badenoch went further than her headline pledge, stating that her ultimate ambition was for a Conservative government to abolish inheritance tax entirely, though she said this could not be proposed immediately because of existing spending commitments in areas such as defence, prisons and the economy. She framed the full abolition as a goal to be pursued "as soon as we can afford it," indicating that fiscal constraints would determine the timetable.

The Conservatives have estimated the cost of the inheritance tax package at around £6 billion a year. To offset that, the party says it has identified £71 billion in potential government spending savings, including reductions to the welfare budget. The figures are likely to face scrutiny from independent analysts and political opponents, who will question whether the savings are achievable and whether the policy is fully funded. Inheritance tax raised approximately £7 billion for the government in 2023-24, and about 4.72% of UK deaths resulted in an inheritance tax charge during that period, underscoring how the tax affects a relatively small but symbolically significant slice of the population.

The speech was as much about political positioning as policy. Badenoch sought to draw sharp distinctions between the Conservatives, Labour and Reform UK, presenting her party as the "no-nonsense party" and characterising Reform as a "circus." In a remark aimed at those who have defected to Nigel Farage's party, she said the Conservatives had experienced an "export boom of drama queens going to Reform," adding: "This party is now the no drama party, we are the no-nonsense party." She described many Reform voters as "our people," conceding that the Conservatives had "let them down" and saying she wanted them to "come back home."

Badenoch was equally direct in rejecting any electoral pact with Reform. She told the conference that to those who urge a united right, "we are not uniting with that," arguing that "character, conduct, and standards matter" and that voters deserve better. Her comments drew one of the strongest reactions of the afternoon from party members in the hall, suggesting the stance resonates with an audience that remains wary of Farage's outfit.

The Conservative leader also took aim at Prime Minister Andy Burnham, labelling him a "Paddington Bear prime minister" who is "hoping that the problems will just go away." She accused Burnham of wanting to "live in the past," a line intended to contrast her self-described renewal of the Conservative Party with what she portrays as a Labour government lacking fresh ideas. The personal jibes formed part of a broader argument that her party has changed since its historic defeat at the 2024 general election, a claim she will need to make repeatedly if the Conservatives are to recover lost ground.

With the party trailing both Labour and Reform in the opinion polls, Badenoch acknowledged the scale of the challenge. She said people are "looking through the shop window" and "like what they see," but "not enough of them are buying yet, we need to fix that." To illustrate her approach to reviving a long-standing brand, she invoked Marks and Spencer, arguing the retailer had "adapted their style for today's market and people are flooding back." She added: "Just like M&S, we must learn from our mistakes, win back trust and make people feel good about our party again."

Rival parties were quick to attack the inheritance tax proposals, arguing they would prioritise wealthier households at a time when many families are struggling. Labour Party chairwoman Bridget Phillipson said: "The Tories haven't changed," adding that Badenoch had shown the Conservatives' choice is "to do nothing to help ordinary families struggling with the cost of social care, prioritising the wealthiest instead." The criticism centres on the distributional impact of cutting a tax that, despite affecting a minority of estates, is often associated with wealthier homeowners in high-value property areas.

Reform UK's economy spokesman, Robert Jenrick, also rejected the policy, saying Badenoch had "chickened out of doing anything big" and is "for the 2%." The former Conservative MP contrasted his party's offer, saying: "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." He added: "The Tory Party is looking after its own in Kensington, Reform is looking after the country." The exchange highlights the intensifying battle on the right for voters who abandoned the Conservatives at the last election.

Beyond inheritance tax, Badenoch used her 66-minute speech to highlight other policies the party has announced in recent days. These include a £10 billion 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 has also pledged to scrap the so-called "cliff edge" that causes parents in England to lose childcare support abruptly, a long-standing complaint among working families.

The conference address came amid widespread speculation in the days beforehand that Badenoch would use the occasion to announce inheritance tax changes, and she delivered on that expectation near the end of her remarks. The policy is designed to appeal to homeowners and aspirational voters who may feel that inheritance tax penalises ordinary families rather than the very wealthy. Whether it succeeds will depend on how voters weigh the promise of tax relief against questions about funding, public service pressures and the credibility of the Conservatives' broader economic plan.

For Badenoch, the speech was also a test of her leadership less than a year after taking the helm of a party reeling from a devastating election result. She presented the Conservatives as "renewed" and "coming back," language intended to reassure members that the party is capable of winning again. But with Labour and Reform both ahead in the polls, her challenge is to convert the enthusiasm of the conference hall into support among voters who remain unconvinced that the Conservatives have changed enough to deserve another chance.

The inheritance tax announcement will now become a central plank of the Conservatives' offer to the country, and it is likely to be revisited in detail as the next general election approaches. Badenoch has left herself room to argue that the policy is both ambitious and fiscally responsible, while her opponents will seek to portray it as a giveaway to the affluent. The debate over who benefits, who pays and whether the numbers add up is likely to define much of the political argument in the months ahead.