More than 14,000 families were landed with unexpected inheritance tax bills after falling foul of the seven-year gifting rule, figures show.

Some wealthy families faced tax bills of more than £3 million because relatives died within seven years of giving them valuable gifts of cash or assets.

Inheritance tax is charged at 40 per cent on the value of your estate above the inheritance tax-free allowance of £325,000, known as the nil-rate band. This allowance increases to £500,000 if it includes a main home left to a direct descendant (a child or grandchild) and the estate is worth less than £2 million.

A popular way to avoid an inheritance tax bill is to give away cash or other assets before death. The person must survive for seven years after making the gift for it to be considered outside their estate and not liable for inheritance tax. If the person dies between three and seven years after making the gift, tax is charged on a sliding scale of 8 per cent to 32 per cent, although this applies only if the person gave away more than the £325,000 nil-rate band allowance in the seven years before they died. Gifts made within three years of death attract the full 40 per cent inheritance tax rate.

A total of 14,030 gifts were liable for inheritance tax in 2022-23 — the most recent data available — according to a freedom of information request from HM Revenue & Customs.

The investment firm RBC Brewin Dolphin, describing them as “failed gifts”, said the 25 biggest ones were worth £7.9 million each on average after allowances and exemptions were used up. A gift of this size would incur a £3.1 million tax bill if it was made within three years of death.

The overall average of failed gifts was £171,000 after allowances and exemptions. These would attract a bill of £68,400 if the death happened within three years.

• Everything you need to know about the seven-year inheritance tax rule

Michelle Holgate from RBC Brewin Dolphin, which submitted the freedom of information request, said: “Strategic gifting was once seen as a tactic of the super-affluent, but has now gone mainstream. We’re getting inquiries in particular from farmers looking to pass on assets such as land to the next generation without triggering a big inheritance tax bill.

“People are naturally protective of family businesses, which in some cases have been built up over several generations. They want to keep these businesses in the family and see them thrive long into the future.”

• Inheritance gift guide: the do’s and don’ts of giving away money

More and more families are being drawn into paying inheritance tax after a series of raids by the chancellor. In her budget last year Rachel Reeves announced that private pension pots would be liable for inheritance tax for the first time from April 2027. She also changed agricultural property relief and business property relief, which had allowed farmers and family businesses to pass on much of their assets tax-free. From April 2026 the reliefs will be limited to the first £1 million of combined agricultural and business property. Anything above that value will benefit from 50 per cent relief, leaving an effective inheritance tax charge of 20 per cent.

According to forecasts by the Office for Budget Responsibility, inheritance tax revenue will almost double over the next five years to £14.3 billion.