Conservatives pledge inheritance tax exemption for homes
Conservative leader Kemi Badenoch has announced plans to exempt family homes from inheritance tax if her party wins the next general election, a move that could significantly impact property succession planning across the UK.
Speaking at the Conservative Party Conference, Badenoch outlined proposals that would eliminate inheritance tax on primary residences and provide couples with an additional £1 million allowance exempt from the levy.
“The next Conservative Government will legislate so nobody will ever pay inheritance tax on their family home,” Badenoch stated, adding that she aims to abolish inheritance tax entirely when fiscally viable.
Impact on inheritance tax bills
According to Badenoch, the proposed changes would reduce all inheritance tax bills and cut the number of families paying the tax by more than half. The pledge forms part of a broader property taxation package that includes commitments to eliminate stamp duty on primary home purchases and rule out any mansion tax on occupied properties.
Timothy Douglas, Head of Policy and Campaigns at Propertymark, acknowledged the significance of the stamp duty commitment. “Stamp Duty remains a major cost for those looking to move and can prevent people from making the move that is right for them,” he said.
However, Douglas emphasised that any replacement taxation system must be “properly considered and developed” with industry consultation to ensure it supports transactions rather than shifting the tax burden elsewhere.
Property industry response
On the inheritance tax proposal, Douglas noted that the commitment “will be welcomed by homeowners and families planning for the future.” He added that for many households, the family home represents their most significant asset, making certainty around succession planning important.
The property market has seen homeowners increasingly focused on financial planning, with taxation remaining a key consideration for those looking to move or pass on assets.
Douglas cautioned that implementation details would be critical, stating that any changes must be “clear, workable and considered alongside the wider taxation and housing policy landscape.”
The proposals represent a significant shift in Conservative property taxation policy, though their implementation would depend on the party securing victory in the next general election. The current inheritance tax system applies a 40% rate on estates above £325,000, with additional allowances available when passing on a main residence to direct descendants.
