Kemi Badenoch has pledged that a future Conservative government would remove family homes from inheritance tax entirely, regardless of their value.

The Conservative leader announced the proposal during her closing speech at the party’s conference in Birmingham on Wednesday, October 7.

Under the plan, a family home passed to children or grandchildren would be exempt from inheritance tax, while couples would also be able to pass on up to £1 million in other assets without paying the tax.

The Conservatives estimate the measure would cost around £6 billion a year once fully implemented and say it would be funded through reductions in government spending rather than additional borrowing.

‘No inheritance tax on your home’

Setting out the policy, Badenoch presented it as part of a wider Conservative commitment on housing taxes.

She told delegates:

“This is my guarantee: 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.”

She said the party would legislate so that nobody would pay inheritance tax on their family home.

The Conservatives say the proposed changes would more than halve the number of families paying inheritance tax.

How current inheritance tax rules work

Under the current system, an individual generally has a £325,000 inheritance tax nil-rate band.

An additional residence nil-rate band of up to £175,000 can apply where a qualifying home is passed to direct descendants.

Unused allowances can be transferred to a surviving spouse or civil partner, meaning a qualifying couple can currently pass on as much as £1 million before inheritance tax becomes payable.

The residence allowance begins to be withdrawn for estates worth more than £2 million.

Those thresholds are currently frozen until April 2031.

Under the Conservative proposal, the family home itself would be removed from inheritance tax calculations, with no stated upper value limit.

Couples would additionally receive a combined £1 million allowance for other assets.

Policy would particularly affect higher-value estates

The proposal would have the greatest cash benefit for estates containing expensive homes which would otherwise exceed existing inheritance tax thresholds.

Critics have argued that removing any ceiling on the value of an exempt property would provide the largest tax reductions to wealthier households.

Supporters of the policy argue that rising property values and frozen thresholds have brought more families into the inheritance tax system.

The proposal would not abolish inheritance tax altogether.

Badenoch sets out wider Conservative programme

Badenoch used her conference speech to position the Conservatives as a lower-tax party while arguing that tax reductions would need to be matched by cuts in government spending.

She also repeated commitments on welfare spending, additional prison places and increased defence expenditure.

The inheritance tax announcement formed one of the central economic pledges of the Conservative Party conference, held in Birmingham from October 4 to October 7.

The policy remains a Conservative proposal and would require legislation if the party returned to government.