Prime Minister and Chancellor to raise inheritance tax threshold to £1m in Wednesday's Budget

Inheritance tax on family homes worth up to £1m will be scrapped, the chancellor's next Budget will confirm.

George Osborne will on Wednesday say to MPs that he is increasing the level at which the tax is levied from £0.65m to £1m.

Writing in a joint article in The Times, Osborne and Prime Minister David Cameron said: "As we promised in our manifesto, we'll take the family home out of inheritance tax for all but the richest.

"It can only be right that when you've worked hard to own your own home, it will go to your family and not the taxman."

The change, which was originally pledged as part of the Conservative election manifesto, will come into effect in April 2017.

The reform will be paid for by limiting the pension tax relief to those who are earning more than £150,000.

The pair also said they planned to help people "reach their dreams" by keeping Help to Buy in place until 2020 and extending the Right to Buy scheme to 1.3m housing association tenants, who will get a discount of up to 70% to buy their own home.

"We will also boost supply," they continued. "We will build 200,000 starter homes by 2020, sold at below market rate and for first-time buyers under the age of 40.

"To deliver on this commitment, we will ensure every reasonably sized housing site includes a proportion of these homes for young people."