Jeremy Hunt is considering slashing inheritance tax for the richest families while threatening a real-terms cut in benefits.
The Tory Chancellor is reportedly looking at plans to halve the 40% rate of the tax as he prepares to unveil the Autumn Statement next week.
Downing Street declined to comment, with a spokeswoman for the PM telling reporters: "I just wouldn't get into any speculation on the Autumn Statement". Mr Sunak also swerved questions on tax when quizzed by reporters on Friday, saying "you'll hear more about that next week" in the Commons.
Figures show the inheritance levy was only paid by around 4% of estates in the UK in 2021. The Institute for Fiscal Studies has previously said the cost of abolishing inheritance tax completely - a possible Tory election manifesto policy - would cost £7billion.
Around half (47%) of the tax cut would go to those with estates worth £2.1million or more after their death, the IFS concluded. The reports of slashing inheritance tax comes as the Chancellor also considers a real-terms cut in benefits for some of the poorest families on Universal Credit.
Instead of hiking the benefit in line with September's rate of inflation - 6.7% - Mr Hunt is looking at using October's lower rate of 4.7% to free up cash for tax cuts.
The Child Poverty Action Group said: "It would be indefensible for the chancellor to fund tax cuts for the wealthy by not properly uprating benefits. "Using October’s inflation rate would be a cut. There are 4.2 million children living in poverty and their families simply cannot absorb a further financial blow."
On Thursday Mr Hunt also announced plans to cut access to free NHS prescriptions and legal aid under a more severe sanctions regime for those on Universal Credit. Reforms unveiled ahead of the Autumn Statement said the penalty will apply to people sanctioned for more than six months, who also face their claims being closed.
Digital tools will also be used to "track" attendance at job fairs and interviews under the toughened sanctions regime, the government said.
Mr Hunt said: "We’re serious about growing our economy and that means we must address the rise in people who aren’t looking for work – especially because we know so many of them want to and with almost a million vacancies in the jobs market the opportunities are there. “These changes mean there’s help and support for everyone – but for those who refuse it, there are consequences too. Anyone choosing to coast on the hard work of taxpayers will lose their benefits.”
But charities described the measures as "unspeakably cruel" while Labour's welfare chief Liz Kendall said the proposal "does nothing to fundamentally change the state of our health service or our Jobcentres after a decade of failure from the Tories".