As it stands, each individual can bequeath any assets worth up to £325,000 free of inheritance tax. Married couples can combine their allowances, giving a total of £650,000 tax-free.
But as of last month an additional allowance, which applies only to the family home and only when the person's estate is passed on to children or grandchildren, came into play. This "family home allowance" gives an additional £100,000 per person, or £200,000 per couple, raising the full exemption per individual to £425,000.
It was not clear whether Mr McDonnell was suggesting that Labour would reverse just this £100,000 additional allowance or do something altogether more radical.
Reports published in the wake of his interview suggested that Labour might consider scrapping the ability of married couples to combine their two allowances. This would at a stroke draw hundreds of thousands of families back into the inheritance tax net.
It would also be a surprising move since it was Labour, under Gordon Brown, that introduced the ability of married couples to combine their allowances. It would mean, for instance, that the owner of an average property in or around London would fall within the tax net. This has only recently become the case.
*per individual. The year 2017-18 includes £100,000 'family home allowance'. Sources: IFS, Nationwide Building Society
The Government's "family home allowance" has been criticised in several quarters. The fact that the allowance is not available to those who do not have children has angered some people, while accountants and solicitors complain that elements of the new allowance are difficult to apply.
When the family home allowance applies fully in 2020-21 it will add a full £175,000 to each individual's £325,000 exemption - giving a total of £500,000 per person or £1m per married couple.
Even with this increase, however, the inheritance tax take is expected to rise in future years.