Inheritance Tax

Alicia Kearns Excerpts

Wednesday 14th October 2026 Commons Chamber

[The Financial Secretary to the Treasury and Paymaster General (James Murray)]

I thank the shadow Chancellor for delivering a speech for which it was, this time, much clearer when it had ended.

The Opposition motion invites us to speculate on the contents of the Budget. As right hon. and hon. Members will be used to me and my colleagues saying, the Government do not comment on speculation and the Chancellor will deliver his Budget in this House on 28 October. However, I am free to share with the House some of the context in which the Chancellor will take his decisions.

The Budget comes amid unprecedented economic shocks, with conflicts in both the middle east and Europe hitting people here and around the world. However, we are not powerless. That is why we are giving families and businesses breathing space where we can and starting to make the big, long-term changes needed to create good jobs and growth in every postcode. Everything we do at this Budget will be built on fiscal stability. Our fiscal responsibility has been underlined by the IMF this week, and as it made clear, our country is forecast to have the lowest borrowing—that is to say, the smallest deficit—in the G7 from 2029. Our country is demonstrating strong resilience in the face of global challenges, with the joint second-fastest growing economy in the G7 this year.

To deliver good growth in every postcode and to provide breathing space for families and businesses, we must continue to take responsible choices. That is why, as the Prime Minister and the Chancellor have made clear, fiscal discipline will underwrite every promise this Government make to the British people. We will meet our fiscal rules at the Budget later this month with a buffer against uncertainty. We will control borrowing so that we can bring inflation down and reduce long-term pressures on our public finances. That is the right thing to do, because there is nothing progressive about a Government spending £1 in every £10 on debt interest, rather than on the priorities of working people.

This Government inherited public finances that were in a mess and public services that were in crisis. Since the general election, we have put the NHS back on its feet, with the waiting list down by more than 250,000 since the Government came to power. Last year we delivered the highest number of affordable homes in a decade. We are lifting over half a million children out of poverty by scrapping the two-child limit and expanding free school meals. We are investing in Britain’s future, with an additional £120 billion of capital investment across this Parliament, and in Britain’s roads, rail, energy and other infrastructure that is so important to driving growth. Through reforms to how our country works, from planning to pensions and skills, we have helped to create the conditions for private investment to rise by almost 5% since the general election.

We have always been prepared to take the responsible choices to fix the foundations of our economy, repair our broken public services and deliver the investment needed to support growth. That includes driving down waste and driving up efficiency in the public sector, with a 16% reduction in departmental admin budgets by the end of the spending review period. We are reprioritising spending so that taxpayers’ money is spent on their priorities, cancelling digital ID in order to remove VAT from household electricity bills, reprioritising Ministry of Housing, Communities and Local Government spending to help tackle homelessness and bringing the national bus cap down to £2 for 2027, funded by savings from the Department for Energy Security and Net Zero. We are reforming the welfare system through the Milburn and Timms reviews, while tackling welfare fraud and error to save over £14 billion by the end of 2030-31, and we have taken decisions on tax to ensure that we meet our fiscal rules of living within our means.

Our decisions on tax reflect our commitment to sound public finances. We want to make sure that those with broader shoulders make a fair contribution. Although very few people, if any, want to pay more tax, we recognise that only a small proportion of the largest estates pay inheritance tax, and it makes an important contribution to the public finances.

Inheritance tax is forecast to raise almost £15 billion in 2030-31 to help deliver public services, and it is currently payable on around one in 20 estates. Our reforms to agricultural property relief and business property relief, introduced in April of this year, are expected to raise around £300 million per year, while offering substantial protection for family farms and businesses. Through a 100%—

[Alicia Kearns (Rutland and Stamford) (Con)]

I thank the right hon. Gentleman for giving way on this point. He focuses on how much he believes this tax will raise, but what does the impact assessment say about how many businesses will close as a result of this tax?

[James Murray]

The impact assessment, or tax information note, is published alongside the publication of the policy at the Budget.

I want to just make the point that to protect family farms and family businesses, the threshold for the 100% relief goes up to £2.5 million per person, and above that there is a 50% rate, which means an effective inheritance tax rate of up to 20% above that. Furthermore, the repayments can be spread over up to 10 years interest free, so there are substantial protections in place for family farms and family businesses. That 100% relief on the first £2.5 million of qualifying agricultural and business assets means that a couple can pass on up to £5 million of qualifying agricultural and business assets free of inheritance tax between them, in addition to the existing allowances such as the nil rate band. These protections will support family farms as we work with farmers to build a sector that is productive, profitable and resilient for the future.

--- Later in debate ---

[Alicia Kearns (Rutland and Stamford) (Con)]

There is a principle at the heart of the motion and it is a simple one: what a person earns through a lifetime of work belongs to them and not the Treasury, and that when the time comes, they have the right to pass on what they have earned to the people they love. It is neither a loophole nor a privilege. It is the oldest instinct there is: for people to work, to save and to leave their children better off than they were. That stands in stark contrast with the Government’s approach. The question that we have put before the House is not complicated: should Governments spend less so that families can keep more? The Conservatives’ answer to that question is yes.

In the Mandelson files published this summer, we saw that the Secretary of State for Work and Pensions wrote to Peter Mandelson:

“Every meeting I have is, ‘Who can we tax in order to pay benefits to others’.”

He was right to be exasperated. Some 7 million people—more than 10% of our population—now claim at least one benefit. We will spend over £100 billion on health and disability benefits just this year. A full-time worker on the national living wage takes home £22,500 a year. Someone out of work on credit, with the average housing support and personal independence payment, receives £25,000 a year. We now pay more not to work than to work. However, if somebody has worked and then dies, her unspent pension will now be taxed because of this Government, and the house that she spent her life paying for will be taxed. It beggars belief that Labour MPs looked at those figures, recognised how they are strangling our country, and concluded that they would rebel against the modest reforms proposed by the last Prime Minister. Indeed, the Labour party would rather remove a sitting Prime Minister than attempt to create a fairer system.

I ask Members to imagine that they are farmers in the communities that I serve. You are up at the crack of dawn and working until very, very late. It is relentless every day. Your profit margins are the lowest of almost any industry, but you persevere, because you value your land and your family’s connection to it, and you take pride in feeding our country. But Labour hits you with increased road taxes on double-cab pick-up trucks, increased employer NICs and minimum wage, taxes on fertilisers, the cruel family farm tax, and now a levy on the land itself when it passes from parent to child.

Lincolnshire and Rutland are the breadbasket and agricultural heartland of Britain. We are proud of what we do to feed this country, so it is offensive when the Nature Minister says that traditional rural Britain—the pubs, ale and loyal dogs that we adore—is a far-right fantasy that never really existed. I invite her and any Labour MP to come and visit Rutland, Stamford and the Harborough and South Kesteven villages, because we are not a fantasy; we are communities who deserve respect—although if I came from her constituency, I would also consider it a fantasy to see the type of idyllic life that we lead in our villages. We will never apologise for valuing the traditions and way of life that make our rural communities so special.

The Nature Minister was wrong when she claimed that rural pubs “never really existed”. She would, however, have been correct if she said that she and her Government are doing their best to wipe them out of existence. Under Labour’s plans, the Bertie Arms in Uffington faces a 2,000% increase in business rates by 2029. The hard-working landlady has dismissed the minor relief that came as tokenistic and says that it will make no difference because of Labour’s other tax hikes.

[Daisy Cooper]

I agree with the hon. Lady. The business rates increases under this Government are very damaging, but she will remember that the previous Government also pledged to fundamentally reform business rates and completely failed to do so. Does she understand why businesses across the country are fed up with both the Conservatives and Labour on this point?

[Alicia Kearns]

I am grateful to have the chance to state our record. We cut employee national insurance twice, taking 9 million workers out of it. We raised the national insurance threshold. We abolished the lifetime allowance. We cut fuel duty. We had business rates relief for hospitality and pubs. We did all those things to support our pubs and businesses.

The Prime Minister told the voters of Makerfield that the family farm tax “needs looking at again”, so I wonder whether Members in this Chamber who have given it their full-throated support this week will regret their words in a few weeks’ time. Let us see. Since he took office, Members on his Front Bench have excitedly chattered about reindustrialisation, as if the word on its own builds a factory; it does not, and neither does taxing a business at the moment that it passes to the next generation. From April, the family firms in my communities, such as Rutland Plastics, Coles Plant Centre, Arnold Wills, CS Ellis and Rutland Garden Village, and independent family shops on my high street, like Harrison & Dunn and Walkers Bookshops, will all face the same death tax as our wonderful farmers, like Percy Gilman.

Business property relief existed for a reason—so that a company need never be broken up to pay the Treasury. Those same businesses are not just economic powerhouses in communities like mine, but social powerhouses, as Philippa Wills said to me this morning. They are rooted in our communities and make decisions for the longer term, because they care about what happens to our people, communities and towns. The Government do not care about that; they have broken the social contract between businesses and our young people and those in part-time work, because they have made it so much harder to hire them. Who loses out the most, apart from young people? Women, because it is women who rely on part-time employment when raising their children who are now unable to pick up additional work. That is the true cost of this tax: not the £15 billion a year that the Government forecast it will raise by 2030, but the businesses never started, the capital that leaves, and the women and young people left without jobs.

Tax cuts must be paid for, which is why we have put spending cuts first, but let us be clear. If we tax a family firm at death, the founder sells early, moves abroad or never builds at all. If we tax a farm, the fields go to a solar developer, or they are built on and we become reliant on foreign imports. If we tax the people who work and pay the people who do not, we should not be surprised when fewer people work. We want people to work—we want them to be able to celebrate and benefit from a lifetime of toil and hard work. That is human nature, and nothing to be ashamed of.

We have a Government who are asking who they can tax, and an Opposition asking how much more people can keep. Labour’s assault on farms and businesses, its insistence that rural life does not exist, and its addiction to spending will destroy this country. We want people to succeed, and we hold our rural way of life close to our hearts. That is why everyone must support this motion today.

--- Later in debate ---

[Dan Tomlinson]

The Government’s policy on inheritance tax has been set out today. We will not be voting for the motion before us today because we do not believe that slashing public services and public spending for people living in £10 million mansions is the right priority. That is the Conservatives’ choice; it is not ours.

This Government will deliver good growth in every postcode and provide breathing space for families and businesses. Underneath all that, we will continue to focus on fiscal discipline. The Prime Minister and the Chancellor have been clear that we will meet our fiscal rules at the Budget later this month with a buffer against uncertainty, and we will continue to control borrowing so we can bring down inflation and reduce the long-term pressures on our public finances. That is the right thing to do, because there is nothing progressive about a Government spending £1 in every £10 on debt interest rather than on the priorities of working people.

[Alicia Kearns]

The Minister has just touched on what the Prime Minister has said. The Prime Minister also told the people of Makerfield that he needed to look again at the family farm tax. Why are the Labour Benches so full of MPs this evening saying that we are absolutely not moving on it when the Prime Minister made that very clear promise during the by-election? Who are we to believe: the Prime Minister then or the Prime Minister now?

[Dan Tomlinson]

We will vote against the Opposition motion this evening. The responsible approach that this Government are taking stands in stark—