The Conservative leader has previously said she wants to find “fiscally responsible ways” to reduce the inheritance tax burden. According to the Birmingham Mail, party insiders have indicated that the options under consideration include cutting the current 40% inheritance tax rate or increasing the threshold at which the tax becomes payable.
Badenoch Prepares To Set Out Inheritance Tax Plans
Badenoch is due to deliver her keynote conference speech at Birmingham’s ICC on Wednesday. Her intervention comes as inheritance tax is expected to raise £15 billion a year for the Treasury by the end of the decade.
Rather than proposing the complete abolition of the tax, Badenoch is expected to support a reduction. According to the Birmingham Mail, Conservative Party figures have suggested that she could either lower the 40% rate or increase the threshold before inheritance tax applies.
Badenoch signalled her intention to examine the issue last month. In a post on X, she said she believed it was “morally wrong to punish people for doing the right thing” after spending a lifetime working, saving and building up assets to pass on to the next generation.
She argued that inheritance tax increasingly affects home-owning middle-class households, people who have accumulated savings and small business owners. House price inflation, she said, had contributed to bringing more families within the scope of the tax.
“I want ordinary families to be able to build generational wealth, not just the super-rich who can do so now,” Badenoch wrote. She also stressed that the party would not make a formal announcement until it had developed what she described as a clear plan. The proposal would therefore represent a reduction rather than a removal of inheritance tax, with the precise approach still to be announced.
Tax Policy Forms Part of Badenoch’s Wider Political Argument
Inheritance tax is also expected to form part of a broader argument Badenoch will make about taxation, government spending and the role of the state. According to the Birmingham Mail, she will tell delegates that British politics is approaching what she describes as a “battle of ideas”, contrasting the Conservative Party’s economic approach with that of the Labour government.
In extracts from her planned speech, Badenoch argues that Labour believes economic growth should be driven by politicians and that government should decide how income, pensions and savings are distributed.
She is also expected to claim that this approach will leave people facing higher taxes and household bills while making it more difficult for them to meet everyday costs.
Badenoch will present the Conservatives as an alternative based on the view that money earned by individuals belongs to them rather than to the government. She will also argue that decisions taken collectively by individuals are preferable to what she calls the “central planning of bureaucrats and politicians”.
The Conservative leader will link that argument to public spending, saying that spending money the country does not have on commitments it cannot afford is “reckless”. Her inheritance tax proposal sits within that wider position. The details disclosed so far leave two options on the table: a reduction in the 40% inheritance tax rate, or a higher threshold before the tax begins to apply.
