Local estate agent Mullucks Wells has welcomed today’s emergency budget announcement that inheritance tax on properties worth up to £1m is to be scrapped.

The Prime Minister David Cameron had tried to introduce the measure during the last government, but was thwarted by his Liberal Democrat coalition partners. Now, with a Conservative majority behind him, he is free to carry out the promise first made in 2008.

Responding to the announcement, Mullucks Wells Residential Director William Wells said: “This is excellent news. Quite rightly, those who have worked hard and earned well should have a choice over what to do with their money - and it seems rather unfair to penalise people at 40% for having invested in bricks and mortar. Apparently, an incredible 94% will be taken out of this controversial tax altogether.”

Under the current system, individuals start paying the 40 per cent tax on properties worth over £325,000 for an individual or £650,000 for a couple who are married or in a civil partnership. From 2017, these thresholds will rise to £500,000 and £1m respectively. On properties worth more than £2m, the allowance will be gradually tapered away until it is worth nothing to those with homes worth more than £2.35m.

There had been concerns that that such changes would act as a disincentive for elderly people in expensive homes to downsize. But the Chancellor has prevented that problem by allowing people who have owned valuable homes to defer their allowance until death, even if they moved out of the property concerned decades earlier.

William Wells added: “The existing allowance was simply inadequate here in the South East, where house prices have increased substantially. Properties in Essex and Hertfordshire often cost more than the threshold at which the 40 per cent tax charge is triggered.

“The inheritance tax threshold was only supposed to affect the very wealthy, so perhaps £1m is not an unreasonable level to set it, as it probably represents a figure for which you could buy a good family house in Bishop’s Stortford.

“The only surprise is that having waited for seven years, the change is not being brought into effect immediately. But on balance, most people will see a wait of 21 months as a positive result.”