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

Conservative leader Kemi Badenoch used her keynote address at the party's Birmingham conference to commit a future Tory government to eliminating inheritance tax on family homes, while raising the amount couples can pass on tax-free to £1 million. The announcement, delivered at the city's Symphony Hall, formed the centrepiece of a 66-minute speech aimed at distinguishing her party from both Labour and Reform UK ahead of the next general election.

Badenoch described inheritance tax as a levy that was "supposed to be a tax on the super wealthy" but has evolved into "a tax on ordinary middle-class families in every corner of our country". She pledged that the next Conservative government would legislate so that no one would ever pay the tax on their family home, and that couples would additionally be able to leave £1 million free of the charge. According to her calculations, these measures would cut every inheritance tax bill and reduce the number of families liable for the tax by more than half.

The Conservative leader went further, stating that her personal ambition was to abolish inheritance tax entirely "as soon as we can afford it". However, she cautioned that she could not currently propose full abolition because of existing spending commitments in areas such as defence, prisons and the wider economy. The party estimates the partial reform would cost approximately £6 billion annually, and believes it has identified £71 billion in potential savings across government spending, including cuts to the welfare budget.

Under the current system, estates valued above £325,000—or £500,000 when a home is left to children or grandchildren—face a 40% tax rate on the portion exceeding those thresholds. Married and civil partners may also transfer assets between one another. Official figures show that in 2023-24, some 4.72% of UK deaths resulted in an inheritance tax charge, generating around £7 billion for the public purse. The policy therefore targets a relatively small proportion of estates, but one that has grown as property values have risen.

The speech was framed as an attempt to sharpen the dividing lines between the Conservatives and their rivals. Badenoch portrayed her party as the "no-nonsense party", contrasting it with what she called the Reform UK "circus". In a pointed reference to figures who have defected to Nigel Farage's outfit, she remarked that the Conservatives have 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 also sought to appeal directly to former Conservative voters who have switched allegiance to Reform, describing many of them as "our people". She acknowledged that the party had let them down and said she wanted them "to come back home". Badenoch was emphatic in ruling out any electoral pact with Reform, telling the hall: "To those who say 'unite the right', we are not uniting with that." She stressed that "character, conduct, and standards matter" and said people deserve better than what Reform offers.

The Conservative leader did not spare the governing party either. She directed numerous jibes at Prime Minister Andy Burnham, branding him a "Paddington Bear prime minister" who was "hoping that the problems will just go away". She accused him of wanting to "live in the past", using the attack to position the Tories as the forward-looking alternative. She also said she did not wish to live in a country run by people who "debate whether my mixed-race children are English", a remark that drew a strong response from the conference floor.

Much of the speech was devoted to the theme of renewal. Badenoch argued that her party is "renewed" and "coming back", as she continued her efforts to convince voters that the Conservatives have changed after their historic defeat at the 2024 general election. She acknowledged the party's current polling position, trailing both Labour and Reform, and conceded that 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 vision for revival, Badenoch drew an unlikely comparison with the retailer Marks and Spencer. She said the high-street brand had "adapted their style for today's market and people are flooding back", and argued the Conservatives must do the same. "Just like M&S, we must learn from our mistakes, win back trust and make people feel good about our party again," she told members. The analogy was intended to frame the Tories as a trusted institution capable of modernising without abandoning its core identity.

Badenoch also reminded the audience of other policies announced in the run-up to the conference. These included a £10 billion anti-missile defence system, the creation of 50,000 additional prison places, and a pledge to halve the rate of employer national insurance on earnings for workers aged between 21 and 24. The party has also promised to scrap the "cliff edge" that causes parents in England to lose childcare support, a long-standing grievance for families navigating the benefits system.

The inheritance tax proposals drew immediate criticism from rival parties. Labour Party chairwoman Bridget Phillipson said: "The Tories haven't changed. Kemi Badenoch has shown that the Tories' choice is to do nothing to help ordinary families struggling with the cost of social care, prioritising the wealthiest instead." Her intervention sought to cast the policy as a giveaway to the affluent at a time when public services remain under strain, echoing a familiar Labour attack line against Conservative tax plans.

Reform UK's economy spokesman, Robert Jenrick, himself a former Conservative MP, also hit back. He claimed Badenoch had "chickened out of doing anything big" and was "for the 2%". He contrasted Reform's offer with the Tory plan, 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." Jenrick added: "The Tory Party is looking after its own in Kensington, Reform is looking after the country."

The conference speech represents a critical moment for Badenoch, who has faced pressure to define her leadership and reverse the party's electoral fortunes. By focusing on inheritance tax, she has chosen an issue that resonates with homeowners and aspirational families, particularly in southern England, where property values have pushed more estates over the threshold in recent years. Yet the decision to stop short of full abolition and to delay it until finances allow leaves her open to charges that the pledge lacks immediate substance.

With the next general election still some way off, Badenoch's challenge will be to convert the applause in Birmingham into broader public support. Her framing of the Conservatives as the "no-nonsense party" is designed to appeal to voters disillusioned with political drama, but the party's deficit in the polls suggests the message has yet to land. Whether the inheritance tax pledge and the M&S-inspired rebrand can shift that trajectory will become clearer in the months ahead, as the Tories seek to rebuild a coalition that was shattered in 2024.