Jeremy Hunt is planning a stealth raid on inheritance tax in the Autumn Statement as part of the chancellor’s attempt to fill the hole in the UK public finances.

Government officials said Hunt was drawing up plans to extend a freeze in the inheritance tax “nil rate band” from 2025-26 to 2027-28, a move that would raise at least half a billion pounds for the Treasury.

The plan is part of a broader strategy to use “fiscal drag” to surreptitiously raise the funding needed for the government to balance the books.

With inflation high, Hunt plans to keep tax-free thresholds at the same level for various levies, including those on pensions, capital gains and income, to expand the state’s tax haul via the back door.

The original freeze in the inheritance tax threshold to 2025-26 was announced in the spring Budget of 2021 by then chancellor and current prime minister Rishi Sunak.

That policy was set to raise £1bn over four years, according to the Treasury at the time. But that figure is now likely to be far higher because of soaring inflation, according to Stuart Adam, senior economist at the Institute for Fiscal Studies think-tank.

Extending the threshold freeze for another two years beyond 2025-26 would raise £400mn-£500mn if inflation is back to its target level of 2 per cent, according to Adam. If inflation is higher, however, then the freeze would raise more money for the state.

On death, inheritance tax is paid at 40 per cent on the value of the estate over the nil rate band — the level at which no tax is paid — which has been set at £325,000 since 2009, and £650,000 for a couple.

In 2017, the government introduced a new “transferable main residence nil rate band of £175,000”, which applies when a home is left to direct descendants.

Had the nil-rate band risen in line with inflation it would have gone up from £325,000 to £428,000 in the period since 2009.

Tax receipts from inheritance tax have soared from £2.3bn in 2009 to £6bn in 2021-22 as property prices have rocketed while the threshold stayed the same.

The Treasury said it would not comment ahead of the Autumn Statement on November 17.

Hunt’s plans for multiple stealth tax rises are part of a wider plan for tax increases and public spending cuts worth up to £54bn a year to fill the hole in the public finances, according to allies of Britain’s chancellor.

With just 10 days until the Autumn Statement is announced, Hunt is preparing a huge budgetary tightening on the same scale as his predecessor George Osborne’s austerity Budget of 2010.

The final spending cuts total is yet to be decided, reflecting daily changes in gilt markets but is now higher than ministers expected a fortnight ago.

The Treasury is aiming to overshoot the actual hole of about £40bn in order to create additional fiscal headroom to allow for the possibility that economic conditions deteriorate more than currently expected.

Under his draft proposals Hunt currently intends to cut £33bn from public spending while raising taxes by about £21bn, according to officials, which would imply tight restraints on departmental spending.

The chancellor could also break the “triple lock” on increases in the state pension, which ensures that pension payments rise in line with inflation, average earnings or by 2.5 per cent each year, whichever is higher. Another controversial option would be to raise benefits in line with average earnings rather than inflation.

Hunt has warned of “eye-wateringly difficult” decisions ahead. Not only is there a fiscal hole in Britain’s public finances but the country is facing, according to the Bank of England, its longest recession for a century.

The chancellor is looking at freezing income tax thresholds for another two years until 2027-28, as well as raising the taxation rate on share dividends and cutting the tax-free allowance on dividend income.

He is also examining the case for cutting the reliefs or allowances for capital gains tax, which is paid on shares and second homes.

Hunt is likely to extend the current freeze on the CGT annual exempt amount of £12,300 from 2025-25 until 2027-8.

The chancellor is expected to freeze the pensions lifetime allowance for another two years to 2027-8 at its current rate of £1,073,100.