In which the family home gets a tax promise, earning more might stop making you poorer, and the savings spreadsheet acquires some rather large numbers.

Introduction

In June, my Conservative mid-term report was subtitled ‘Rebuilding from the Wreckage’. I recalled the ‘fiscal flotsam and jetsam’ of the 2024 manifesto and gave the rebuilding exercise an incomplete grade. [1]

There was a recognisable direction. Abolish stamp duty on primary homes. Reverse the farm inheritance tax changes. Find enough spending cuts to pay for it all, while keeping Liz Truss safely out of the photograph.

Four months later, there is more to assess.

Andrew Griffith has replaced Mel Stride as Shadow Chancellor, and Birmingham has produced a more substantial list of things the Conservatives would change.

Badenoch’s closing speech has now added a much wider inheritance tax pledge. [2, 11]

Some are sensible. Some need more work. Several involve correcting features of a tax system over which the party presided for fourteen years.

There is a certain cheek in returning to the house and offering to fix the plumbing. Especially when your fingerprints are on the dodgily fitted u-bend.

The grief tax loses the family home

The closing speech supplied the missing centrepiece – a proposal to exempt the main home when left to direct descendants and increase the general inheritance tax nil-rate band to £500,000 per person.

The party says a couple could pass on the home plus another £1 million tax-free, with that additional allowance available for bequests to anyone. [11]

The announcement specifies no upper value limit for the home. The house would sit outside the additional allowance, rather than use it up. [11]

That is a material change from today’s rules. The ordinary nil-rate band is £325,000, with up to £175,000 of residence allowance where the conditions are met.

Married couples and civil partners can potentially combine allowances to shelter £1 million in total. The residence allowance also tapers away for estates above £2 million. The current system does not simply exempt the family home. [13]

Nor did Badenoch announce immediate abolition of the entire tax. That remains an ambition, conditional on affordability. The wider proposal sits alongside the promised reversal of the farm and family-business relief changes. [11]

Compared with June, this is a substantial move. The Conservatives have gone beyond undoing Labour’s changes and set out a broader reduction of their own. My Reform conference article described its retreat from prioritising the ‘grief tax’. The dividing line has become rather clearer. [1, 12]

There is an obvious appeal to letting people pass on a home without a tax bill forcing the next generation to find the cash. But the choice of asset matters. Why should wealth held in bricks receive treatment unavailable to the same wealth held in a bank account?

My concern is the incentive this creates. Depending on the eventual rules, a valuable home could become an even more attractive place to park wealth. Downsizing could mean swapping exempt property for taxable cash. Existing rules contain downsizing protection; the new regime will need an answer to that problem too. [13]

There is a tension here. Abolishing stamp duty would remove a reason not to move. A home exemption without suitable safeguards could introduce a different reason to stay put.

The promotion you cannot afford

The clearest improvement is the promise to remove the £100,000 income cut-off for the working-parent childcare offer and Tax-Free Childcare. [3]

The current test is adjusted net income, not simply the salary printed on a payslip. If either parent expects to exceed £100,000, the household loses eligibility for these schemes. The funded-hours offer discussed here is the English scheme; childcare provision is devolved. [4]

That produces a peculiar result. Two parents with adjusted net incomes of £99,000 each can qualify, subject to the other conditions. A household with £101,000 coming from one parent and £20,000 from the other cannot.

The household earning £198,000 can receive help denied to the household earning £121,000.

There is an obvious objection. Why spend public money helping people earning six figures? Fair question. But designing a system in which accepting a pay rise can leave someone substantially worse off is not a particularly clever way to answer it.

A taper would be another possible response, although it would create its own high effective withdrawal rates. The Conservative choice is to remove the upper income restriction. That is a clear policy choice, with a clear group of beneficiaries.

It is also a Conservative government’s childcare architecture being remodelled by its successors in opposition. [4] Better late than never, but perhaps let’s have less of the discovery-of-fire routine.

The other trap at £100,000

The childcare cut-off sits beside a different problem… the withdrawal of the personal allowance.

For every £2 of adjusted net income above £100,000, £1 of allowance disappears. For someone earning within the taper band in England, Wales or Northern Ireland, an extra £1,000 can therefore generate £400 of income tax on the extra earnings and £200 from losing £500 of allowance. Effective income tax rate: 60%. Employee NI is additional. [5]

Griffith identified these rates as something he wants to eliminate, while making clear that doing so depends on time and affordability. [2]

An ambition, then.

Removing the childcare cliff would not remove the allowance taper. One withdraws a benefit abruptly and the other withdraws a tax allowance gradually. They happen to collide around the same number, which is why £100,000 has become less a milestone than an obstacle course.

I welcome a party recognising the problem.

National Insurance returns in a different uniform

My June report asked what had happened to Sunak’s promises to cut employee NI and abolish it for the self-employed. [1] The new conference proposal answers a different question.

The Conservatives would halve the employer NI rate for workers aged 21 to 24 from 15% to 7.5%. Earnings above £50,270 would remain subject to the standard rate. [6]

This is a reduction in the employer’s bill. It does not halve the NI deducted from a young employee’s payslip.

Using today’s £5,000 secondary threshold, a qualifying employee on £30,000 would produce a gross employer saving of £1,875 a year: £25,000 multiplied by 7.5%. The employer’s actual cash benefit would depend on its circumstances, including the Employment Allowance and any existing relief. [7]

That could help hiring. It could also subsidise jobs which would have existed anyway, or influence the choice between applicants on either side of the age boundary. Neither point makes the policy worthless. Both matter when estimating its effect.

The costings are particularly interesting. The reported static cost is £3.25 billion; the party puts the net cost at £2.3 billion in 2029/30 after allowing for extra tax receipts and lower benefit spending. [6]

That is £950 million of expected behavioural feedback. It may be justified, but it is an assumption to examine, not money already recovered.

The existing under-21 employer relief also means this changes the age-based steps rather than abolishing them. [7] A party attacking cliff edges should check where it is putting the next one.

The property owning classes remain well represented

The flagship I discussed in June remains abolition of SDLT on primary residences. Griffith reaffirmed it, alongside reversing the farm and family-business IHT changes and removing VAT from independent school fees. [1, 2]

Abolishing SDLT would address a real distortion. Taxing transactions discourages people from moving when a different home would better suit their work or family. But removing the buyer’s tax bill does not guarantee an equivalent fall in the total cost of buying. Some benefit may feed into sellers’ prices.

Nor should the promise be casually described as abolishing every property transaction tax across the UK. Scotland and Wales have their own devolved regimes. [8]

The new addition is a pledge to scrap Labour’s High Value Council Tax Surcharge, relabelled the ‘Family Homes Tax’. [2]

The proposed surcharge concerns owners of residential property in England worth at least £2 million, starting in April 2028. Initial annual charges run from £2,500 to £7,500, with the highest band applying above £5 million. [9]

There are, of course, good arguments about valuation, liquidity and bolting another charge onto an already incoherent property-tax system.

One tax per Budget and something for the recycling bin

Griffith’s ambition is to abolish at least one tax in every Budget. He also pledged to scrap the packaging levy and referred to reviewing Making Tax Digital and IR35. The last of those deserves a closer look. [2]

The first commitment is an appealing headline, although counting abolished taxes is a peculiar performance measure. Remove a tiny levy while complicating income tax and you can meet the target while making the system worse.

I would rather count the hours, disputes and compliance costs removed.

Reviewing Making Tax Digital does not tell a business which reporting obligations would survive. Accountants have encountered the word ‘review’ before. Many have grown old waiting for the publication of the review’s findings. Many simply did not make it to see resulting reforms.

The packaging proposal concerns extended producer responsibility, the scheme charging producers for packaging-waste costs. Those receipts support waste services; they are not simply an unrelated pot of Treasury revenue. [10]

The system may be burdensome. But abolishing the charge does not make the rubbish disappear. Someone still needs to fund its collection and treatment.

That is the question for the replacement policy. Moving a cost away from a producer can be sensible. Pretending the cost has ceased to exist is less convincing.

IR35: replace, reform or review?

On 17 September, Griffith had promised to replace IR35, rather than merely reform it. IPSE’s response at the time confirms that stronger commitment. [17]

In his published conference speech on 5 October, however, Griffith described his earlier announcement as an aim to ‘review Making Tax Digital and IR35’. Then Conservative MP Blake Stephenson’s conference round-up on 7 October stated: ‘We will replace IR35 and simplify the tax code’. [2, 18]

So IR35 did receive a mention, and the replacement pledge was still being repeated at the end of conference. I would not infer its withdrawal from that inconsistent wording. But the material I have found does not explain the replacement test, the allocation of responsibility or the implementation timetable.

Those are the things contractors actually need to know. What would distinguish a genuine business engagement from employment, who would make that decision, and who would bear the bill if HMRC disagreed?

The need to deliver savings has not gone away

June’s £47 billion question was whether the spending savings could actually be delivered. The Golden Economic Rule reserves at least half of identified savings for deficit reduction, leaving the remainder for tax cuts and other measures. [1, 16]

The conference savings scorecard has now arrived. CCHQ lists £71 billion of savings, including £36.1 billion from welfare, against £33.7 billion of commitments, excluding reprioritisations. The inheritance tax proposal accounts for £6 billion of that commitments column. [14]

Taken at face value, those headline totals leave £37.3 billion, clearing the rule’s requirement to reserve at least half the savings for the deficit.

The IHT figure has a published modelling basis. Oxford Economics’ report for Onward estimates that combining a full main-home exemption with a £500,000 nil-rate band would reduce annual IHT liabilities in 2029/30 from £12.6 billion to £6.6 billion. The reduction is £6 billion; £6.6 billion is what remains payable. These are modelled liabilities, with assumptions and limitations, rather than guaranteed cash receipts. [15]

The scorecard

Policy	My mid-term assessment	Conference position
SDLT	Abolition of tax on primary homes was the flagship	Reaffirmed; replacement funding remains central
IHT	Firm opposition to the farm changes	Main-home exemption for direct descendants; £500,000 general band; full abolition remains an ambition
National Insurance	Old employee and self-employed pledges had faded	Specific employer cut for ages 21 to 24; a different policy
Work incentives	The platform was still being rebuilt	Childcare cut-off removal is specific; tackling high marginal rates remains an ambition
Simplification	A work in progress	Tax abolition target; IR35 replacement pledge lacks detail; MTD review
Funding	The £47 billion savings case needed scrutiny	Published scorecard meets the headline rule; delivery and assumptions need scrutiny

Verdict

This is a more developed tax platform than the one I assessed in June. Removing the childcare cliff edge addresses a genuine defect. The youth employer NI cut is specific enough to test. The closing speech has added a substantial IHT proposal and made the party’s property-owning constituency unmistakable.

But a collection of tax cuts does not a coherent tax system make. Making work pay is a sound objective. Giving housing another advantage over other forms of wealth needs a separate defence. And publishing costings is the beginning of the argument, not the end of it.

I would move my June assessment forward because there is now enough policy to mark. There is not yet enough evidence to award the fiscal credibility certificate and gold star. The funding case still depends on spending reductions arriving at the scale and speed promised.

The Conservatives have found the dodgy u-bend and supplied an estimate for unblock it (Ok, I don’t know much about plumbing. Should have thought it through!)

I would still like to know whether they can do the work for the price.

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[1] Breaking Tax, UK Tax Policy Mid-Terms #4 Conservatives, 1 June 2026

[2] Conservatives, Andrew Griffith conference speech, 5 October 2026

[3] Conservatives, childcare policy announcement, 4 October 2026

[4] GOV.UK, working-parent childcare eligibility

[4] HMRC, Tax-Free Childcare adjusted net income test

[4] Childcare Regulations 2022, regulation 14

[5] HMRC, personal allowance withdrawal and income tax rates

[6] ITV/PA, employer NI proposal and static versus dynamic costings, 7 October 2026

[6] Guardian, party statement specifying the earnings limit, 6 October 2026

[7] HMRC, employer NI rates, thresholds and reliefs for 2026/27; example is illustrative