A senior Conservative figure is set to outline plans to reform inheritance tax at the party’s annual conference, signaling a shift away from earlier suggestions of outright abolition. Reports indicate the speech will propose targeted reductions—such as lowering the 40% rate applied to estates exceeding £325,000 or adjusting the thresholds where the tax applies—rather than eliminating it entirely. With the tax expected to generate over £10 billion annually, any changes would still represent a significant financial commitment. Analysts suggest potential adjustments could include reducing the rate or expanding exemptions, though the exact measures remain under discussion.
Conservative leader will deliver her keynote speech to Tory conference laterAs Andrew McDonald and Megan McElroy point out in their London Playbook briefing, there are broadly two options if Kemi Badenoch wants to cut inheritance tax without getting rid of it completely. They report:There were persistent rumors and some reporting before this conference that the Tories were looking to scrap that tax altogether. But since then, Badenoch’s team has been making more cautious noises. Right-leaning papers including the Telegraph, Times and Sun all report this morning that Badenoch will cut IHT, but not scrap it. That would sit well with the broad theme of the speech on the state of the public finances, given inheritance tax is expected to raise more than £10 billion a year from next year onwards. To put it another way: scrapping IHT would effectively cost the same as building a “Britannia Shield” every year.Instead: The Times’ Oliver Wright and co. reckon Badenoch will announce a cut to the 40% inheritance tax rate, which only applies to an estate’s value over £325,000 (or £500,000 if a home is given to a direct descendant). If that is what Badenoch opts for … it’s still an expensive tax cut. Estimates from 2023, the last time the Tories were looking at this, reckoned a 10 percentage point cut to 30% would cost a few billion a year. The other rumor doing the rounds is that she could change the thresholds at which IHT kicks in.It’s a tax that is charged on estates when people die, but only around one in 20 estates will actually end up paying it. Continue reading...
