Kemi Badenoch vows to SCRAP inheritance tax on family homes

Couples would also be able to leave an additional £1million tax-free on top of the family home exemption under the proposals.

Ms Badenoch claimed the changes would cut every inheritance tax bill and reduce the number of families paying the levy by more than half.

Speaking at the Conservative Party conference, she said: “Everybody’s been asking me about inheritance tax. So let’s talk about it. We are not abolishing inheritance tax at this conference.”

Ms Badenoch said the Conservatives could not currently afford to abolish the tax while also funding other commitments and reducing the deficit.

She said: “Governing is about choices, tough choices, and Conservatives will not announce a tax cut without telling you how we are going to pay for it.”

However, the Tory leader argued that inheritance tax was increasingly affecting “ordinary middle class families in every corner of our country”.

Setting out her plans, Ms Badenoch said: “What is the thing that most people want to pass on to their children and grandchildren? It is their family home.”

She added: “Passing on your home to your family is one of the most human instincts of all.

“So, conference, the next Conservative government will legislate so nobody will ever pay inheritance tax on their family home.”

Ms Badenoch also promised that couples would be able to pass on significantly more of their wealth without paying the levy.

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She said: “On top of that, couples will be able to leave an additional £1m tax free. And these changes mean every inheritance tax bill will be cut and the number of families paying inheritance tax will fall by more than half.”

The Conservative leader said her longer-term ambition remained to get rid of inheritance tax completely.

She told delegates: “My ambition is to abolish inheritance tax altogether as soon as we can afford it.”

Ms Badenoch also linked the inheritance tax announcement to wider Conservative proposals on property taxation.

She said: “No stamp duty when you buy your home, no mansion tax when you live in your home, and no inheritance tax on your home when you pass it to your children or grandchildren.

“That is what the next Conservative government will deliver.”

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However, the proposals have already faced criticism from campaigners who argue that reducing inheritance tax would disproportionately benefit wealthier households.

Faiza Shaheen, executive director at Tax Justice UK, branded the plans “reckless”.

She said: “Cutting inheritance tax, as trillions of pounds is going to pass between generations, is a reckless move by any politician that claims to be serious about getting Britain thriving.

“This is a policy that would take money from some of the poorest, to give to the wealthiest. And it would deprive public services of vital cash when the pressures on delivery are increasingly acute.”

Ms Shaheen argued that the Government should instead raise more money from the wealthiest households and businesses to fund public services.

She said: “What this country needs is a fair funding deal for our NHS, education and social care, matched with proper investment in housing and energy to break the cycle of volatile and high prices set by profiteering companies.

“And how do we do this? Paid for by taxing the mega-rich and companies that are making a killing off war and economic shocks.”

Under the current system, inheritance tax is generally charged at 40 per cent on the portion of an estate above the available tax-free thresholds.

Individuals currently have a £325,000 nil-rate band, while an additional residence nil-rate band can apply when a qualifying home is passed to direct descendants.

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Ms Badenoch’s proposal would go considerably further by taking the family home out of inheritance tax altogether, while providing couples with an additional £1million tax-free allowance.

The policy would only take effect if the Conservatives return to government and the necessary legislation is passed.