Labour plans to lower the threshold for inheritance tax from £850,000 to £425,000, prompting fears of an unexpected 40 per cent charge for thousands of families who want to leave property to their children.

John McDonnell, the shadow chancellor, confirmed he will drag more households across the country into the so-called death duty by scrapping a series of tax giveaways introduced by the Conservatives.

Sources suggested he could even cut the threshold to around £300,000.

He told the BBC that Labour "will be reversing ...giveaways", while aides told The London Evening Standard that the party's manifesto could include a pledge to raise £1billion by halving the tax-free allowance for family homes worth over £425,000.