Prime Minister David Cameron says only the very wealthy should pay inheritance tax as he promised to raise the amount people can pass on to their loved ones without tax when they die.
Inheritance tax is paid by everyone with an estate worth more than £325,000, or for married couples and civil partners, a combined value of £650,000.
Any cash, investments or assets above that value are taxed at 40%.
Cameron says the Tories will make a manifesto pledge to raise the inheritance tax threshold at the next general election, due in May 2015.
The Conservatives made a similar promise in their last manifesto, but bowed to pressure from the Lib Dems and kept the limit at £325,000 rather than shifting the bar upwards to £1 million.
Election promise
Setting inheritance tax that high would exempt all but the wealthiest families from the tax.
Cameron made his comments following information released by the independent Office of Budget Responsibility (OBR) revealed twice as many families face inheritance bills in the next five years.
The OBR reckons as many as 10% of estates will have to pay inheritance tax if the threshold stays the same.
Cameron said: “Our manifesto included a promise that we wanted to take the threshold for paying inheritance tax to £1million, but we did not win an outright majority in the election and the pledge was not part of the Coalition agreement.
“I would like to go further in future. I believe passing wealth down through the generations and builds a stronger society.
“Inheritance tax should only be paid by the rich, it shouldn’t be paid by those people who have worked hard and saved and brought a family house.
Raising the bar
“The ambition is still there, I would like to go further. It’s something we’ll have to address in our election manifesto.”
Due to rising house prices, inheritance tax has raised £800 million more than estimated in only three months, says the OBR.
When Chancellor George Osborne made his Autumn Statement in December 2013, the OBR reckoned inheritance tax collected by the Treasury would rise from £3.1 billion in 2012 to £5.6 billion in 2018.
The latest figures show the 2018 amount to be around £6.4 billion
Other property-related taxes are also likely to show a similar increase – like stamp duty as Help to Buy assists more first time buyers on to the housing ladder.