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Conservatives plan major inheritance tax overhaul to exempt family homes
Overview
Conservative leader Kemi Badenoch has announced plans to overhaul inheritance tax by increasing the basic threshold to £500,000 and fully exempting family homes from the tax. While the Conservatives estimate the policy will cost £6bn a year, tax experts and the Institute for Fiscal Studies warn that the changes would primarily benefit wealthier households, particularly in London and the South-East, and could discourage older people from downsizing.
Key points
- Conservative leader Kemi Badenoch announced plans to ensure nobody pays inheritance tax on their family home and to allow couples to leave an additional £1m tax-free.
- The standard threshold for paying inheritance tax would rise from £325,000 to £500,000, alongside a full exemption for family homes.
- The Conservatives estimate the policy will cost £6bn a year by 2029-30, funded partly through identified savings including welfare cuts.
- Tax experts and the Institute for Fiscal Studies warn that the primary beneficiaries will be wealthier households with high-value homes.
- Critics argue that exempting the family home entirely could discourage older people from downsizing and further congest the housing market.