Downing Street has put distance between the government and a new report which calls for a 50 per cent inheritance tax on the most wealthy.

The move came after the Labour-supporting Institute for Public Policy Research (IPPR) called for the new tax band in order to fund death tax cuts on the middle classes.

Under the plan, estates of over £808,000 would pay the top band - which would raise £147 million per year at the same time as cutting the duty for nine out of 10 people.

The report argues that the easiest way to make inheritance tax fairer is to introduce a banding system, similar to income tax, with a base rate of 22 per cent and higher bands of 40 and 50 per cent.

IPPR researcher Dominic Maxwell said: "A fairer inheritance tax would see the very wealthy, who are comfortably over the threshold, pay more, whilst the vast majority of families that are currently taxed would pay less.

"As well as being fairer to those who inherit assets, this reform would also benefit those born with nothing, through a beefed-up child trust fund.

"The past decade has seen a worrying rise in wealth inequality.

"Inheritance tax reform is only part of the response needed but it would certainly help to protect the principle that government can and should seek to moderate wider wealth inequalities."

The think tank has close links to Labour, although Downing Street has distanced itself from the proposal.

"Obviously the IPPR make proposals and issue reports from time to time. Ten Downing Street played no part in this work," said a spokesman.