In what is being described as a major U-turn, the government has indicated that the thresholds for inheritance tax might be frozen until 2019 so that the government is able to pay for long-term care of elderly people in England.

The government has said that a £95,000 stealth tax will be imposed on inheritance so as to be able to raise enough funds to fund long term care of elderly people in England. The Treasury is likely to freeze the amount of tax-free inheritance allowed. The move would help fund the £75,000 limit on social care costs.

Gordon Brown had promised to set the threshold at £1 million before the general elections in 2007. This had attracted criticism from George Osborne, the then shadow chancellor. The chancellor promised just two months ago that he had promised to increase the threshold after two years' time.

Some reports indicated that chancellor Osborne has decided that the threshold will not be increased until 2019, which will leave many families in a weaker financially position. According to estimates, an additional 5,000 would have to pay inheritance tax - contributing an additional £1bn over the next five years to fund care for elderly people.