Parents and grandparents who want to help younger generations on to the property ladder could receive a tax break after the Chancellor ordered a review into inheritance tax.

The review by the Office for Tax Simplification could lead to a radical shake-up of the inheritance tax rules and dramatically lower the age at which people tend to inherit life-changing sums.

At present annual sums of £3,000 can be gifted tax free, but money given away which totals more than this could be subject to 40 per cent inheritance tax.

This threshold has been frozen since 1981 when it would have been comfortably covered the deposit on a first house. Today it would take more than seven year's worth of tax-free lifetime gifts to fund an average deposit.

The Chancellor ordered the review in an attempt to address issues of inter-generational unfairness and to help the thousands of grandparents who want to help their grandchildren but are worried about being hit by inheritance tax.