Conservative leader will deliver her keynote speech to Tory conference later
As 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.
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