Ranil Jayawardena, Tory MP for North East Hampshire, called for the “death tax” to be abolished.
The ex-Environment Secretary said: “Let’s celebrate, not penalise, people who are trying to do the right thing. Hardworking families should be free to keep more of their money and use it however they want. That’s why it’s right to work towards abolishing inheritance tax.
“It’s a death tax. It’s also a double tax, because it’s a tax on money which has already been taxed, and is an anti-family policy that places a significant burden at times of great personal stress.
“It’s not fair, it’s not Conservative and it needs to go.”
A report by the Institute for Fiscal Studies (IFS) called for a radical overhaul of the levy.
It called the current system “costly, inequitable and inefficient”.
The standard inheritance tax is currently 40 per cent. It applies on parts of an estate above the inheritance tax threshold – which can be up to £1million for a couple.
The threshold is currently £325,000, although this can be increased to £500,000 if a person leaves their home to their children or grandchildren.
Arun Advani, an associate professor at the University of Warwick and research Fellow at IFS, said: “While inheritances and therefore inheritance tax revenues are set to grow, inheritance tax remains small and comes too little too late to reduce inequalities between those with the wealthiest parents and the rest.
“While it’s conceivable that a more expansive inheritance tax could be introduced, those concerned with social mobility need to look earlier in life than when parents die.”
Just 3.73 per cent of UK deaths resulted in an inheritance tax charge for the tax year 2020 to 2021.
Inheritance tax receipts have been climbing recently, hitting a record £7.1billion a year for the 2022/23 tax year.
Former Chancellor of the Duchy of Lancaster Nadhim Zahawi said: “Brits hate inheritance tax not just because they know it’s bad economics, they hate it because it hurts families at the worst possible time, and takes from people assets that their relatives meant to pass down to them.
“There are lots of things that the Government does to help the less well-off, and rightly so; they should show they are also on the side of everyone who wants to pass what they have built down to future generations, and scrap inheritance tax.”
Jacob Rees-Mogg added: “Death duties are an unfair and economically inefficient tax that raise surprisingly little money. It ought to be abolished in one fell swoop.”
David Sturrock, a Senior Research Economist at IFS, said: “There are reasonable arguments for and against an inheritance tax. But as inheritances grow in size, it’s increasingly important that we address problems in the current system.
“The government should abolish the special treatment given to business assets, certain types of shares, agricultural assets, pensions and homes passed to direct descendants. “These exemptions and reliefs open up channels to avoid inheritance tax.”
Prime Minister Rishi Sunak on Monday was silent on speculation that he was considering changes to the duty, saying only that “the most important tax cut I can deliver for the British people is to halve inflation”.
But cabinet minister Grant Shapps described the duty as “punitive” and “deeply unfair”.