Badenoch Vows to Axe Inheritance Tax on Family Homes as Tories Court Middle-Class Voters

Conservative Party leader Kemi Badenoch has used her keynote conference speech to announce that a future Tory government would eliminate inheritance tax on family homes and allow couples to pass on an additional £1m free of the levy. The proposals, unveiled at the party's gathering in Birmingham, represent one of the most significant tax pledges of her leadership so far and signal a determined effort to reposition the Conservatives before the next general election.

Addressing activists at Symphony Hall on Wednesday, Badenoch framed inheritance tax as a burden that has crept far beyond its intended target. She argued that a tax originally designed to apply only to the very wealthy has become an obligation falling on ordinary middle-class households across the country. Under her plan, she said, no one would ever again have to pay inheritance tax on a family home, and every inheritance tax bill would be reduced, with the number of families paying the tax falling by more than half.

The current system imposes a 40 per cent charge on estates valued above £325,000, a threshold that rises to £500,000 when a home is left to children or grandchildren. Married couples and civil partners can transfer assets between one another, which in practice allows many to shelter up to £1m. Official figures show that in 2023-24 only 4.72 per cent of UK deaths triggered an inheritance tax charge, raising approximately £7bn for the Treasury.

Badenoch went further by setting out an aspiration to scrap inheritance tax entirely, though she was careful to attach a condition. She said her ambition was to abolish the tax altogether "as soon as we can afford it", explaining that she could not commit to full abolition now because of competing spending pressures on defence, prisons and the wider economy. The party has estimated the immediate package would cost around £6bn a year, and believes it has identified £71bn in potential government savings, including through welfare cuts, to fund its commitments.

The speech, which lasted 66 minutes, was as much about political identity as fiscal policy. Badenoch sought to draw sharp distinctions between the Conservatives, Labour and Reform UK, presenting her party as the "no-nonsense party" in contrast to what she characterised as the "circus" surrounding Nigel Farage's outfit. She acknowledged that the Tories had suffered an historic defeat at the 2024 general election but insisted the party is "renewed" and "coming back".

In a striking appeal to voters who have drifted to Reform, Badenoch described many of them as "our people" who had been let down by the Conservatives. She rejected any suggestion of an electoral pact with Reform, telling the hall that "we are not uniting with that" and stressing that character, conduct and standards matter. Earlier in the week she had said she would rather fight another election than strike a deal with Farage's party.

Badenoch leaned on an unusual source of inspiration for reviving a political brand: the retailer Marks and Spencer. She said the chain had adapted its style to the modern market and was now attracting customers back in large numbers, and argued the Conservatives must learn from their mistakes in the same way to win back trust and make people feel good about the party again.

She also sharpened her attacks on Prime Minister Andy Burnham, accusing him of wanting to "live in the past" and labelling him a "Paddington Bear prime minister" who hopes problems will simply disappear. Drawing on her own family background, she said she did not wish to live in a country run by people who "debate whether my mixed-race children are English", a line that drew a strong response from the audience.

The speech touched on other policies announced in the preceding days, including a £10bn anti-missile defence system, the creation of 50,000 new prison places, and a halving of employer national insurance on earnings for workers aged between 21 and 24. The party has also pledged to remove the "cliff edge" that causes parents in England to lose childcare support.

Opposition parties were quick to condemn the inheritance tax plans. Labour Party chairwoman Bridget Phillipson said the Conservatives "haven't changed" and accused Badenoch of choosing to do nothing to help ordinary families struggling with the cost of social care while prioritising the wealthiest. Her remarks reflect Labour's broader strategy of casting the Tory tax agenda as a giveaway to the rich at a time of strained public finances.

Reform UK's economy spokesman, Robert Jenrick, who defected from the Conservatives, said Badenoch had "chickened out of doing anything big" and was governing for "the 2%". He contrasted the Tory offer with Reform's promise of a £500 tax cut for everyone through raising the tax-free personal allowance to £15,000, claiming his party looks after the country rather than its own Kensington set.

The conference comes with the Conservatives trailing both Labour and Reform in the polls, a position that underscores the scale of the challenge facing Badenoch. She acknowledged as much in her address, saying voters are "looking through the shop window" and "like what they see" but that "not enough of them are buying yet". Fixing that, she suggested, is the central task of her leadership.

Whether the inheritance tax pledge can shift that dynamic remains uncertain. The policy is likely to appeal to homeowners in southern England and older voters, core Conservative demographics, but it exposes the party to charges of favouring the wealthy. With fiscal headroom tight and the next election still some way off, the announcement sets an early marker for the tax debate that will shape the coming political season.