Badenoch’s inheritance tax gambit makes no economic sense | Heather Stewart
The Tory leader’s proposal to slash the tax would shovel £6bn of taxpayer money to the already-wealthy Kemi Badenoch’s inheritance tax gambit is a Conservative classic.
By The Guardian
Kemi Badenoch has pledged to remove inheritance tax from family homes and increase the tax-free allowance for other assets, in a proposal estimated to cost about £6bn by 2029-30.
The Conservative leader announced the plan at the party’s annual conference in Birmingham. Under the proposals, family homes would be exempt from inheritance tax, regardless of their value.
The Conservatives also want to raise the individual tax-free threshold for other parts of an estate to £500,000. This would allow a couple to pass on up to £1m in other assets without paying inheritance tax, in addition to the family home.
Badenoch said the changes would cut every inheritance tax bill and reduce by more than half the number of families paying the tax.
The proposals would not abolish inheritance tax altogether. Other property and savings could still be liable for the 40% charge above the relevant threshold.
Figures cited by the Conservatives put the cost of the changes at about £6bn in 2029-30. Separate estimates from Oxford Economics put the first-year cost at £6.6bn, with the cost expected to increase in later years.
The plan has been criticised as a large tax reduction for wealthier households. The Guardian’s Heather Stewart argued that it would transfer public money towards larger estates while reducing tax receipts.
The pledge echoes a proposal made by George Osborne in 2007 to remove the family home from inheritance tax. His plan involved raising the threshold to £1m, but it was not introduced after the financial crisis damaged the public finances.
Badenoch said the Conservatives had not found a way to abolish inheritance tax completely, citing the need to fund other priorities including defence, prisons and deficit reduction.