Downing Street is reportedly holding talks about scrapping inheritance tax as a manifesto offering in a bid to win the next election.

The Times reported that No 10 was discussing whether to make abolishing the levy a commitment to shore up votes in so-called “blue wall” seats in 2025.

Supporters argue that the policy could be a “gamechanger” in the south of England where the Conservatives are defending constituencies vulnerable to gains from opposition parties, according to the paper.

Rishi Sunak made halving inflation by the end of the year one of the five key ambitions for his leadership, and Jeremy Hunt has signalled this target will be prioritised over tax cuts.

The wider economic challenge facing the Chancellor and Prime Minister was illustrated by official figures showing the UK economy contracted in May.

While the party continues to trail Labour in the polls, The Times reported that abolishing inheritance tax was being considered as a manifesto pledge, rather than a policy to be implemented next year.

“It’s about being an aspirational country. You work hard, play hard and pass on your wealth. It’s a live discussion,” one source familiar with the discussions told the paper.

The rate of inheritance tax is currently 40% for estates worth more than £325,000, which is only charged on the portion that is above the threshold.

But estates of spouses and civil partners can pass on up to £1 million without any inheritance tax liability.

Consumer Prices Index inflation peaked at 11.1% growth last year and was last reported at 8.7% for May.

Abolishing inheritance tax could cost the Treasury a potential £7 billion a year and would be contingent on that figure falling significantly, the Times reported.

A No 10 source said: “The PM has repeatedly said that he wants to cut taxes for people.

“As Conservatives that is obvious, we want people to keep more of their own money. But the current economic situation means that Government is completely focused on halving inflation – to help people have more in their pockets at the end of each month.

“This kind of future-scoping speculation just isn’t on his mind at the moment and requires a different kind of economic environment to the one we are operating in.”