Chancellor George Osborne says inheritance tax should only be paid “by the rich” and the Conservatives will set out proposals to increase the threshold before the general election.
In an interview with the Sunday Times, Osborne pledged to put reductions in inheritance tax at the heart of the Conservative manifesto.
He said: “I have taken steps to help with inheritance, making sure that people can pass on their pension to their children. People can pass on their Isas.
“David Cameron has made it clear, as have I, that we believe inheritance tax is a tax that should be paid by the rich and we will set out our further approach closer to the election.”
Each individual gets a £325,000 tax-free allowance on inheritance tax which is transferable between couples.
The Conservatives pledged to raise the limit to £1m in their 2010 manifesto, a move blocked by the Liberal Democrats in coalition. The newspaper says ministers believe Osborne could increase the limit to £2m.
Ukip has promised to abolish it altogether.
Osborne also hinted that a future Conservative government could limit child benefit to the first two children, and ruled out tax increases, including VAT.
He said: “I couldn’t have been clearer that our plans do not involve tax increases, including VAT, because our plans involve cutting public expenditure and saving on welfare budgets.”