Reform pledges to abolish inheritance tax for estates worth under £2m

Reform UK has said it will abolish inheritance tax for estates worth under £2 million in a pledge that increases pressure on the Conservatives to promise their own changes.

The current threshold for inheritance tax is £325,000, although there are some exceptions for family homes. Reform is also proposing to reduce the rate at which the tax is applied, from the current 40 per cent level to 20 per cent.

In reality, the policy will not be implemented after the general election, given that Reform has no prospect of becoming the governing party. But its position will add to pressure on the Tories to promise an inheritance tax cut – something they have considered but not delivered in office.

The Conservatives have been attempting to win back voters tempted by Reform, a party to the Right of them, with policies including the return of national service.

But Nigel Farage’s surprise decision to take over the Reform leadership and run as a candidate to be the Clacton MP is undercutting that drive, and the first poll since his return put Reform just two percentage points behind the Tories.

Earlier this week, some Tory candidates urged Rishi Sunak to free middle class families from inheritance tax by raising the threshold to £5 million. Mr Sunak has focused his recent tax cuts on National Insurance.

Reform’s inheritance tax policy was floated in a draft manifesto published in February. There has been uncertainty about which policies will be kept under Mr Farage’s leadership.

On Tuesday, he told The Telegraph that he and Richard Tice, who was the Reform leader until Monday and is now its chairman, would discuss which policies to keep later.

Mr Tice told The Telegraph on Thursday that the original inheritance tax proposal – which Reform says would take 98 per cent of estates out of the tax – would be kept.

He said: “Absolutely it will stay in the manifesto. It has got a lot of support. I describe it as a grief tax. The cost of collection and the length of time it is now taking are frankly obscene.

“Even if the Tories say they will do something, they keep hinting that and they haven’t after 14 years. It is one of the reasons no one trusts them on anything.”

The Conservatives have yet to unveil their full tax proposals for their election manifesto.