Homeowners with properties worth up to £1million will be able to pass them on to their children tax-free under plans drawn up by George Osborne , it was claimed last night . The Chancellor ’ s proposal is expected to become a key part of the Tory manifesto , but will not be included in tomorrow ’ s Budget after it was blocked by the Liberal Democrats . Plans to raise the inheritance threshold to £1million were included in the party ’ s manifesto at the last election , but were vetoed as part of the Coalition deal in 2010 . Scroll down for video . Passing on properties : The tax break would mean just over 20,000 fewer estates would annually have any inheritance liability . A file photo of a road in Wandsworth , south-west London , is pictured . According to Treasury papers leaked to The Guardian , the proposed measures would also reduce the inheritance tax bill on properties worth up to £2million by £140,000 . The tax break , which would mean just over 20,000 fewer estates would annually have any inheritance liability , is expected to cost nearly £1billion . In the papers , the officials note that the move ‘ will generally be very popular with the public and in the media . It will allow you to say you are exempting those with modest homes from inheritance tax ( with up to £1million of assets ) exempted in certain circumstances. ’ The document , prepared for Treasury financial secretary David Gauke , added : ‘ You have indicated a desire to reduce the burden of inheritance tax . ‘ Having considered the cost of a substantial increase in the existing nil rate band , you and the Chancellor have indicated you would like instead to introduce a more targeted measure to allow the family home to be passed onto the children of deceased without it leading to an inheritance tax liability . ‘ This reflects the concern raised by the public about rising house prices increasingly leading to estates with a modest house particularly in London and the South East paying inheritance tax. ’ Chancellor : George Osborne ’ s proposal is expected to become a key part of the Tory manifesto , but will not be included in tomorrow ’ s Budget after it was blocked by the Lib Dems ( file picture of Mr Osborne in 2014 ) A senior Tory source blamed the leak of ‘ old advice ’ on the Lib Dems , adding : ‘ They are desperate . There is nothing in the Budget on inheritance tax , which we have said repeatedly is an election issue. ’ Another senior Conservative added : ‘ Usually at this time we get leaks of what ’ s in the Budget . This is a leak of what ’ s not in the Budget. ’ It is thought that the Lib Dems leaked the papers ahead of the Budget in a bid to paint to Tories as the party of the rich . The number of people who own a home worth more than £1million has risen dramatically , up 50 per cent since before the financial crash . A survey by property website Zoopla last year predicted that there would be 500,000 people owning a seven-figure property by 2015 . While most are in London , there have been big rises in the south east and the south west , with smaller increases in Wales and Yorkshire .
tomorrow 's proposal expected to be key part of Tory manifesto . Wo n't be included in tomorrow ’ s Budget after being rejected by tax ##payers . proposed tax bill on assets worth up to £ 2 m ' reduced by £ 140,000 '