Badenoch’s inheritance tax gambit makes no economic sense | Heather Stewart
Tory leader Kemi Badenoch's proposal to slash inheritance tax would cost £6bn and benefit the wealthy, economist says.
Intelligence analysis by Qwen 2.5 (3B)
Tory leader Kemi Badenoch's proposal to slash inheritance tax would cost £6bn and benefit the wealthy, economist says.
Kemi Badenoch wants to make it easier for rich people to keep their houses and other stuff when they die. But this could mean fewer houses for people who need to buy bigger homes, which could hurt the economy.
Analysis
The Wealthy Beneficiaries
The proposal would allow couples to pass on the entire family home and up to £1m in other assets without paying inheritance tax. This would benefit the wealthiest 5% of estates, which are already unlikely to be liable for inheritance tax.
Perverse Incentives
The proposal could create perverse incentives for older homeowners to hang on to valuable properties, as the proceeds of downsizing would be grabbed by the government. This could reduce the number of family-size homes coming onto the market, making it harder for young buyers to upsize.
Economic Impact
The proposal would cost the government £6bn and reduce total revenue from inheritance tax by about half. It could also reduce the number of family-size homes coming onto the market, making it harder for young buyers to upsize and potentially slowing economic growth.
Key points
- Tory leader Kemi Badenoch's proposal to slash inheritance tax would cost the government £6bn
- The proposal would benefit the wealthiest 5% of estates
- It could create perverse incentives for older homeowners to hang on to valuable properties
- It could reduce the number of family-size homes coming onto the market
- It could potentially slow economic growth
The proposal could encourage more people to downsize and sell their houses, which could be good for the economy.
The proposal could discourage people from selling their houses, which could hurt the economy.
