Tory shadow chancellor George Osborne has hit out at the government’s inheritance tax threshold as soaring house prices mean that one third of UK households are now liable for the ‘stealth tax’.

Inheritance Tax is charged at 40% on any assets worth more than £275,000 left after death, although the threshold will be raised to £300,000 by April 2007.

Osborne was reported in the Daily Express as saying: ‘Inheritance Tax has become the latest stealth tax imposed on hard working families. Millions of people who are not rich in anyone's eyes are being drawn into the tax net due to the way Gordon Brown has played stealthy tricks with Inheritance Tax thresholds.'

More than eight million households now own property and other assets worth in excess of the £275,000 threshold.