Jeremy Hunt is facing a backlash from Tory MPs over his plans to stealth raid on family inheritance rights.
The Chancellor is set to freeze the threshold above which people have to pay inheritance tax for another two years.
He will announce the move in the autumn statement as part of moves to plug a £60billion black hole in the country’s finances.
Inheritance tax revenue has more than doubled in just over a decade, from £2.3bn in 2009 to £6bn last year.
Indeed, house prices soared 120% during this period, while the threshold for total assets passed on remained at £325,000.
The latest freeze will bring in an extra £1billion a year, an analysis has found, and cause 10,000 more families to pay inheritance tax.
“No time to accumulate even more misery”
Britain has the fifth highest inheritance tax rate in the world, at 40%, the same level as the United States.
Only Japan, South Korea, Germany and France require people to give more to the state when a loved one dies.
Tory MPs have warned Mr Hunt now is not the time to raise household taxes as the UK heads into recession.
“Higher tax rates are a bad idea. We need to fight the recession, support business and promote wider ownership,” said Sir John Redwood.
“We need to attract capital, risk taking and investment, not tax it,” added the former No 10 policymaker under Margaret Thatcher.
Sir Iain Duncan Smith, a former Tory leader, agreed now was “clearly not the time to add to the misery” of hard-working families.
“I don’t think he should raise taxes just as we’re entering a recession and with the highest tax base in 70 years,” he said.
“I’m generally against stealth taxes because they’re stealth taxes. There is a moral argument for lower taxes,” said David Davis, former Brexit secretary.
“I can totally understand what Jeremy Hunt is trying to do, and I support a lot of that, but hopefully we don’t go too far the other way and make the recession worse.”
Individuals can currently leave £325,000 of assets to loved ones tax-free, while couples can pass on £650,000.
When he was Chancellor, Mr Sunak agreed with Boris Johnson to freeze these thresholds until April 2026.
Mr Hunt will announce at next week’s autumn statement that it is now extended for two years until at least April 2028.
Looming spending cuts and tax hikes
The Chancellor is set to unveil £35billion in spending cuts and £25billion in tax hikes in a bid to balance the country’s finances.
Treasury sources have said the brunt of the new austerity measures will be targeted on those with the broadest shoulders.
But there are grumblings among Tory backbenchers who fear the double squeeze on families could worsen the economic downturn.
A senior MP said the party could still turn things around ahead of the next election, but “if we have four quarters of a recession, we’re finished.”
They suggested party unity could start to crumble again after the fall statement, which should dismay low-tax Tories.
Another backbench MP added that the ‘difficult decisions’ Mr Hunt will have to make are likely to hurt their party further in the polls.
“If opinion polls six months from now show Keir Starmer is still going to win, there will be rumblings,” they said.