Cameron pledges to cut inheritance tax so families could share £1m cashback

David Cameron last night pledged to ease the burden of death duties on middle-class families.

He said the Tory manifesto will include a promise to raise the threshold for inheritance tax to £1 million from 2017.

At present, inheritance tax is charged at 40% of the value of any estate above £325,000, or £650,000 for a couple with a joint estate.

But Mr Cameron is pledging to raise the individual tax-free allowance to £500,000, giving couples a shared £1 million tax-free fund.

A study published last month revealed that takings from the tax would double in the next four years if the current threshold was maintained.

Mr Cameron said in an interview: “What this effectively does is take the family home out of inheritance tax.

“This is a tax that is meant to be paid by the rich and not by hard-working families who have saved to buy a home and improve it.

“That wish to pass on something is about the most basic, human and natural instinct there is.”

For properties worth more than £2 million, the allowance will be gradually tapered away, so that those with homes worth more than £2.35 million do not benefit at all.

Some 22,000 families are expected to benefit by 2020 from the pledge, which will be paid for by a £1 billion raid on pension tax relief for people earning more than £150,000.

Meanwhile, in a day of significant pledges, Mr Cameron also vowed to meet NHS funding needs “in full” as the Tories and Labour unveiled rival health policies targeting new mothers and OAPs.

With the General Election outcome too close to call, health has become a key battleground.

Labour will publish a mini-manifesto including a new right to a dedicated midwife before and after childbirth, with leader Ed Milband promising the sort of “personalised one-to-one care” seen in TV hit Call The Midwife.

The Tories meanwhile have laid down the gauntlet to Labour by pledging to pump at least an extra £8 billion a year into the NHS by 2020 to fund in full the five-year reform plan put forward by its chief executive Simon Stevens.

In Scotland, families and health service spending has topped the agenda during a weekend of General Election campaigning.

SNP leader, First Minister and former Scottish Health Secretary Nicola Sturgeon hit back at both parties saying: “The SNP is the only party to put forward funded plans for the NHS across the whole of the UK, meeting the £8 billion challenge in England and providing a total increase of £2 billion for Scotland’s NHS.

“Without genuine additional funding these Tory plans will see cuts to services like social care, police and local government all of which are vital in keeping the pressure off the NHS.

“Meanwhile, Labour’s failure to commit to match our NHS spending plans for Scotland is another reason why voters are backing a strong team of SNP MPs.”

Labour has accused the Conservatives of trying to “fund the NHS on an IOU” after Chancellor George Osborne pledged to increase spending by £8 billion by 2020.

Launching Labour’s health manifesto in Guiseley, West Yorkshire, Miliband said: “The truth is that you can’t save the NHS if you don’t know where the money is coming from.”

The Conservative party’s manifesto is set to be launched this week.

Mr Cameron said: “I want an NHS that continues to expand and improve and provide great care, that continues to save lives.”

“It has always been there for me and my family and I want it there for everyone’s families.”

If the Barnett Formula is still in place, the NHS in Scotland would be in line for a similar increase.