Badenoch's inheritance tax cut proposal draws economic criticism

Conservative Party leader Kemi Badenoch's proposal to significantly reduce inheritance tax has drawn criticism from commentators who argue the plan would primarily benefit already wealthy estates while costing the UK Treasury an estimated £6bn, according to a report in The Guardian.

The proposal revives a long-running theme in Conservative politics around reducing or eliminating inheritance tax, a levy applied to the estates of deceased individuals above a certain threshold. Critics note that such proposals have historically been popular with segments of the party's base but have faced persistent questions about their fiscal cost and distributional impact.

The report draws a comparison to a similar pledge made by then-Chancellor George Osborne in 2007, when he promised to “take the family home out of inheritance tax.” That earlier plan involved raising the exemption threshold to £1m. According to the report, that 2007 pledge is credited with influencing then-Prime Minister Gordon Brown's decision not to call a snap general election at the time, though the policy itself was not ultimately implemented in that form, in part because the 2008 global financial crisis strained public finances by the time the Conservative-Liberal Democrat coalition took office in 2010.

Critics of Badenoch's current proposal argue that cutting inheritance tax predominantly benefits a relatively small number of estates large enough to be affected by the tax in the first place, since most estates in the UK already fall below the threshold at which the tax applies. They contend that the £6bn in foregone revenue could otherwise fund public services or reduce the deficit.

Supporters of reducing or abolishing the tax, a group that has included segments of the Conservative Party for years, typically argue that inheritance tax amounts to a double taxation of income and assets that have already been taxed once, and that it can force the sale of family homes or businesses to cover the levy.

The proposal comes as the Conservative Party, under Badenoch's leadership, seeks to define its fiscal and economic policy positioning. The report does not specify whether the plan has been formally adopted as party policy or remains a stated ambition.