Inheritance tax faces axe if Kemi wins next election as sources say ditching ‘hated’ levy will be funded by welfare cuts
Party sources have told the Mail on Sunday that inheritance tax is likely to be scrapped if Kemi Badenoch's Conservatives win the next general election, provided "the sums can be made to add up." The move is designed to contrast with tax rises under Labour Prime Minister Andy Burnham, including a newly announced £1.6billion "tourist tax" adding a 5 per cent surcharge to UK holidays, and could be unveiled at October's Tory conference in Birmingham, echoing George Osborne's landmark 2007 pledge to raise the IHT threshold.
Inheritance tax is currently levied at 40 per cent on estates above £325,000, rising to £1million in some circumstances, and abolishing it entirely would cost an estimated £9billion, likely offset by welfare cuts. Badenoch has called scrapping the "death tax" a high priority, and her Shadow Chancellor Andrew Griffith has previously named it the tax he would most like to abolish, while a poll for the Adam Smith Institute found 45 per cent of Britons oppose the levy against 25 per cent who support it.
- Tories may scrap inheritance tax if Badenoch becomes PM
- Abolition, costing £9billion, would likely be funded by welfare cuts
- Announcement could come at October's Conservative conference in Birmingham
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Inheritance tax is currently charged at 40 per cent on the value of a person's estate above £325,000 when they die, though this threshold can rise to £1million in some circumstances, such as when a home is left to children. It is one of the UK's most unpopular taxes, despite raising several billion pounds a year for the Treasury, and has long been a target for Conservative politicians who argue it penalises families for saving and passing on wealth.
Kemi Badenoch became Conservative leader after the party's defeat in the last general election, and has been setting out policies aimed at rebuilding support ahead of the next vote. Andrew Griffith serves as her Shadow Chancellor, the senior figure responsible for the party's tax and spending plans, while Andy Burnham is the current Labour Prime Minister whose government's tax decisions the Conservatives are seeking to contrast themselves against.
Scrapping inheritance tax altogether would be a significant and costly move, with estimates putting the lost revenue at around £9billion a year, meaning any pledge to abolish it would need to explain how that gap would be filled, such as through reductions in welfare spending. The idea matters because it signals how the Conservatives intend to position themselves on tax and public spending before voters next go to the polls.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Advocates of scrapping inheritance tax argue it amounts to double taxation, since the wealth being passed on has typically already been taxed as income, profits or capital gains during the deceased's lifetime. They contend it penalises thrift and family responsibility, discourages saving and long-term financial planning, and falls disproportionately on those with illiquid assets such as family homes, farms or small businesses, sometimes forcing distressed sales. Given it raises a relatively modest sum for the Exchequer while being consistently one of the most unpopular taxes with the public, supporters see its abolition as a matter of fairness and a signal that people should be free to provide for their children without state interference, with any shortfall reasonably found through spending discipline elsewhere.
The case against
Opponents argue inheritance tax is one of the few levers for tempering the compounding of wealth and privilege across generations, and that removing it entirely would primarily benefit the wealthiest estates, since most estates already fall below the current thresholds and rarely pay the full rate. They contend that funding an estimated £9billion cost through welfare cuts would transfer resources from the poorest and most vulnerable to those inheriting substantial assets, worsening inequality of opportunity rather than rewarding effort or merit. Rather than abolition, they favour reforming loopholes and reliefs so the tax operates more fairly, viewing it as a reasonable contribution from unearned wealth towards public services and to genuine equality of opportunity for those not born into inherited advantage.