Badenoch pledges to take family homes out of inheritance tax. For large estates, the taper is the detail to watch.

On 7 October 2026, Conservative leader Kemi Badenoch used her closing speech to the party conference in Birmingham to pledge that a future Conservative government would abolish inheritance tax on all family homes passed to children or grandchildren, and allow couples to leave a further £1 million free of the tax, ITV News reported. She said the change would more than halve the number of families paying inheritance tax, and described it as a first step towards abolishing the tax altogether once the Treasury can afford it.

The party used the same conference to promise that it would scrap the so-called mansion tax on properties in England worth more than £2 million, which is due to take effect in 2028. The Conservatives are in opposition, behind Labour and narrowly trailing Reform UK in the polls, according to ITV. None of this has legal effect.

What was and was not announced

The pledge came without a published mechanism. Professional Paraplanner described it as light on detail and suggested the party would probably raise the £325,000 nil-rate band to £500,000 on top of the value of the home. That is the publication’s reading; the party has not set it out. The same report cites an early Oxford Economics estimate of about £6.6 billion a year by 2029/30. The Conservatives say the cost would be met from welfare savings, and opponents have accused them of “fantasy economics”, ITV reported.

On current figures, around 30,400 UK deaths in 2024/25 gave rise to an inheritance tax liability, about 5% of the total, according to Professional Paraplanner. It also cites Institute for Fiscal Studies projections that 12% of people will face the tax on their own death or their spouse’s by 2032/33, as frozen thresholds bite and pensions come into scope from April 2027.

Why the taper matters more than the headline

The existing home allowance, the residence nil-rate band of £175,000 per person, does little for wealthy families. It is reduced by £1 for every £2 by which an estate exceeds £2 million, according to GOV.UK, and at the current level it disappears entirely once an estate passes £2.35 million. For most clients of a family office, the home is already taxed in full.

Coverage of the speech reports no value cap or taper on the proposed exemption. If there were none, a main residence would be relieved whatever its value, which would be a larger change for estates with prime London property than for the median estate the pledge is pitched at. Whether a cap appears in any eventual policy is the question that decides how much the pledge matters at the top end.

What it means for family offices

Nothing in current planning should change on the strength of this speech. The binding date is the Labour government’s Budget on 28 October 2026, as Spear’s notes, and the next general election is still some way off. What the conference does show is that families holding homes worth more than £2 million now face two main parties pointing in opposite directions on the same asset: the mansion tax from 2028 under current policy, and on the Conservative pledge, no mansion tax and no inheritance tax on the home. Planning that assumes the present rules will last, especially for gifts and trust arrangements around the family home, should be tested against both outcomes.

Sources: ITV News, 7 October 2026; Professional Paraplanner, 8 October 2026; GOV.UK, residence nil-rate band guidance; Spear’s, 7 October 2026.