George Osborne is set to abolish what has been dubbed the Death Tax.
In his speech to delegates at the Conservative Party Conference in Birmingham, he will announce he is scrapping the 55% tax that is charged when people pass on a pension pot to dependents.
The measure will apply to all payments made from April 2015.
In the wake of Mark Reckless’ defection to UKIP many will look to Mr Osborne to steady the ship and set the agenda back onto the economy.
The Chancellor will claim the new policy is possible thanks to his “long-term economic plan”.
Mr Osborne is expected to say: “People who have worked and saved all their lives will be able to pass on their hard-earned pensions to their families tax free.
“The children and grandchildren and others who benefit will get the same tax treatment on this income as on any other, but only when they choose to draw it down.”
The announcement comes amid worrying polls for the Conservative Party.
A ComRes survey for ITV News of the 40 tightest battlegrounds found Labour has established a “convincing” 11-point lead over Conservatives in key marginal seats.
A separate poll for former Tory treasurer Lord Ashcrofthas also suggested Ed Milibandis heading for a “comfortable working majority” at Westminster.
Conservatives at the conference are concerned that improved economic figures are not being reflected by better polling figures for the party.
One aspiration of this conference is to convince voters that they will benefit from the recovery under the Conservatives.
Labour claims the Government has only “fixed the economy for those at the top”.
David Cameron hopes his Chancellor’s speech can convince voters that that’s not the case.