The Guardian reported today it had obtained papers showing Tory plans for an increase of the IHT threshold on properties to £1 million.
According to the newspaper the measure would reduce the inheritance tax bill on properties worth up to £2m by £140,000, with the Treasury's analysis concluding that the scheme would "most likely benefit high income and wealthier households".
The plan involves the creation of a new tax-free band worth £175,000 per person on a family home, it was reported today, and would be possible to transfer between married couples, making it worth a maximum of £350,000.
The inheritance tax reforms were included in the Conservatives' 2010 election manifesto but failed to make it into the coalition deal struck with the Liberal Democrats.
Rachael Griffin, Financial Planning expert, Old Mutual Wealth, said: "The proposed rise in the IHT level is a welcome move. The IHT band was frozen at £325,000 back in April 2009.
"Since then, average house prices have risen by 20.3%, making the current IHT threshold vastly out of date with current property prices, leading to more families being caught by IHT.
"If IHT had kept pace with house price inflation, the £650,000 joint IHT allowance would stand at £781,950 today, so this proposed move to £1m would be a progressive move.
"The full details of the proposal are yet to be thought through, but having a separate property IHT exemption could make estate planning more confusing."
Business Secretary Vince Cable has reportedly called the proposal "very cynical", with the BBC quoting the leading Lib Dem as saying: "If taxes can be cut, and it's very difficult in the present budget constraints, we've got to start at the bottom, not at the top."