Rishi Sunak is looking at scrapping inheritance tax and making two major changes to income tax in just a matter of weeks as part of a pre-election handout to boost the Conservative Party's position in the polls.
Number 10 is said to be discussing introducing the cuts in three months time.
Sources told the Telegraph the PM has demanded a "gear change" on tax, after making inflation his main priority, over cutting the tax burden.
In addition to axeing inheritance tax, the Treasury is also considering increasing the threshold at which people start paying the 40 per cent rate of income tax and reducing the basic 20 per cent rate.
Inheritance tax is paid on estates worth over £325,000.
Earlier this year, figures from the Institute of Fiscal Studies showed that Inheritance Tax will raise £15 billion per year by 2032.
Analysis of the latest HMRC figures showed fewer than four per cent of estates paid inheritance tax between 2020 and 2021.
The number is expected to rise to more than seven per cent across the next ten years, as a result of the growth in wealth of older adults.
Inheritance tax is paid on estates worth over £325,000.
The IFS report said this year, the cost of abolishing Inheritance Tax would be £7 billion, but this would rise to £15 billion per year by 2032.
The report warned: "The 90 per cent or so of estates not paying inheritance tax would not be directly affected by such a reform."
Earlier this year, Defence Secretary Grant Shapps this week described inheritance tax as "deeply unfair" and "punitive".
He said: "I think it’s a question, for many people, of aspiration, and people know that there’s something deeply unfair about being taxed all their lives and then being taxed in death as well."
When cuts to inheritance tax were floated in September, ahead of the Autumn Statement, Labour criticised the plans.
Shadow Treasury Chief Secretary Darren Jones said: "A year ago, Liz Truss trashed the economy with unfunded tax cuts. Now Rishi Sunak is doing what Liz Truss wants.
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"Abolishing inheritance tax – which 96 per cent of people never pay – is an unfunded tax cut of £7.2bn per year.
"The biggest threat to the economy is the Conservative Party."
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